Posted on: November 15, 2013 by admin
Will my current blinds purchase qualify for the 10% federal tax credit (up to $500) which was reinstated by the President from the previous year?
This is one of the top five questions potential customers who come to our blinds showroom want to know who are in the market for new window coverings and is a very legitimate one because there is so much confusing surrounding it.
Before I answer that question I think that is best for you to understand what the intent behind the American Taxpayer Relief Act of 2012. President Obama and the legislator are trying to jump start the economy.
While it is safe to say that our situation has improved from 2008, the current economic situation of the United States is far from a rosy one.
This tax credit is a way to entice homeowners with disposable income to spend money and typically energy-efficient products are more expensive than ones that are not. Sure they would like people to buy more items that are better for the environment but saving energy is not the primary reason behind this addition to the bill.
Knowing that piece of information is important because it helps you realize that the government wants you to spend money on things like blinds, however, they have to put measures in place so that the tax credit is not abused.
For the most part the laws concerning claiming a tax credit on most window coverings fall into the grey area. Specific products have been shown to save energy under ideal situations but the variables are extremely dependent upon consumer behavior.
There has been very little data from a reputable source that has show most window coverings to save any substantial amount of energy. Certain manufacturers have have made bold claims insisting that their products are energy-efficient, however, backing those statements up with real facts have been rare.
Also note that not every product with an Energy Star label on it necessarily qualifies for the tax credit. Please read this statement from Energy Star about this very subject.
If you would like to get a tax credit at the end of the year then you need to get a Manufacturer's Certification Statement. This is an official document that is signed from the window covering manufacturer certifying that the product they are making qualifies for the tax credit.
As long as you have this document and the blinds were installed before December 31, 2013 then you can apply for the tax credit. There is a section on line 52 for you to enter your tax credit on Form 5695 for your 2013 taxes.
Your tax credit will be automatically approved but can be revoked at a later time should the IRS find out that your purchase did not meet the requirements for the tax credit.
Read Notice 2009-41: Credit for Residential Energy Efficient Property from IRS
Everybody in the blinds business wants to make sales, oh course, so it should be no surprise that many salesman will tell you a certain product qualifies for the tax credit when it actually does not. On the flip side Energy Star and the IRS are very lenient on what they allow to qualify for the tax credit. Keep in mind that they do not want to deter people from remodeling their home and in fact would like to encourage it. The worse thing that can happen is that you do not get to write off $500.
Insulated drapes, honeycomb shades (example), plantation shutters and window films have had a very good history of getting approved. Many types of blinds, even ones from designer names, should be cautiously counted as an "energy saving" product.
There is a high probability that you will not have any problems as long as you have your certification. Keep in the back of your head that there is a small chance the IRS will send you letter telling you that your tax credit as been reversed, and in that case you will owe them an additional $500. The worst case scenario in this equation is not bad. I would recommend that you choose blinds you like and let the $500 rebate just be "icing on the cake."
About the Author
This post was written Ellen Barsak, who we asked to come onto our blog and clear this topic up. We get many questions of people wanting to know if their purchase with us will quality for the tax credit and we instruct them that to our knowledge it does not.