Taxpayers who made some energy efficient improvements to their home or purchased energy-efficient products last year (including for certain electric vehicles) may qualify for a tax credit this year. Following is a brief description of six energy-related tax credits created or expanded by the American Recovery and Reinvestment Act of 2009 (the ARRA).

1. Residential Energy Property Credit. This tax credit is for homeowners who make qualified energy efficient improvements to their existing homes. This credit is 30 percent of the cost of all qualifying improvements. The maximum credit is $1,500 for improvements placed in service in 2009 and 2010 combined. The credit applies to improvements such as adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.
2. Residential Energy Efficient Property Credit. This tax credit will help individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and wind turbines installed on or in connection with their home located in the United States, and geothermal heat pumps installed on or in connection with their main home located in the United States. The credit, which runs through 2016, is 30 percent of the cost of qualified property. ARRA removed some of the previously imposed annual maximum dollar limits.
3. Plug-in Electric Drive Vehicle Credit. ARRA modified this credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. The minimum amount of the credit for qualified plug-in electric drive vehicles, which runs through 2014, is $2,500 and the credit tops out at $7,500, depending on the battery capacity. ARRA phased out the credit for each manufacturer after they sell 200,000 vehicles.
4. Plug-In Electric Vehicle Credit. This is a special tax credit for two types of plug-in vehicles—certain low-speed electric vehicles and two- or three-wheeled vehicles. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after Feb. 17, 2009, and before Jan. 1, 2012.
5. Credit for Conversion Kits. This credit is equal to 10 percent of the cost of converting a vehicle to a qualified plug-in electric drive motor vehicle that is placed in service after Feb. 17, 2009. The maximum credit, which runs through 2011, is $4,000.  
6. Treatment of Alternative Motor Vehicle Credit as a Personal Credit Allowed Against AMT.  Starting in 2009, ARRA allowed the Alternative Motor Vehicle Credit, including the tax credit for purchasing hybrid vehicles, to be applied against the Alternative Minimum Tax. Prior to the 2009 law, the Alternative Motor Vehicle Credit could not be used to offset the AMT. This meant the credit could not be taken if a taxpayer owed AMT or was reduced for some taxpayers who did not owe AMT.

For additional information in regard to all these tax credits, consult your professional tax advisor or tax preparer, or see IRS Form 5695, Residential Energy Credits and IRS Fact Sheet FS-2009-10, Energy Provisions of the American Recovery and Reinvestment Act of 2009. The IRS also has produced a brief YouTube video to provide more information: Energy Tax Credit-Claim It- 2011. Please feel free to forward this article to others that might benefit from this information.