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The 3 Tax Extenders that Could Save You Money

As part of the Appropriations Act of 2020 that was signed into effect at the end of 2019, several tax laws were extended (sometimes called the “extenders”) that had previously expired on December 31, 2017. Three of the more common tax items that were extended include the Nonbusiness Energy Property Tax Credit, the Mortgage Forgiveness Exclusion, and a Mortgage Insurance Premium Deduction. The applicability of these tax items was extended to the 2020 tax year and was made retroactive to December 31, 2017, meaning you can amend your 2018 and 2019 tax returns to include these items. Therefore, it could be in your best interest to see if they apply to you. The Energy Tax Credit – Nonbusiness Energy Property Tax Credit This credit applies to certain energy improvements to your principal residence. Qualified energy improvements include items such as installing new exterior windows or doors or home insulation. Residential energy improvement costs include installing certain water heaters, furnaces, and cooling systems. To qualify for the credit, the improvement must meet certain energy efficiency standards and be installed and ready to use prior to the end of the tax year. To document that the improvement qualifies for the credit, you can rely on a certification statement from the manufacturer of the product. For items such as windows, doors, and insulation, you can claim 10% of the cost of the improvement, with a $2,000 lifetime limit for windows. Note that only the actual cost of the product applies to the credit, not the installation cost. Furnaces and cooling systems have set amounts for the credit and the installed cost qualifies....