Thursday, February 15, 2018

How to claim the $300 stove tax credit

Congress passed a budget bill including a 2017 extension of the tax credit for wood and pellet stoves.  The stove credit is for $300 for stoves purchased up until Dec. 31 2017.

Taxpayers do not have submit receipts with their taxes.  They just have to keep in their records the sales receipt and the declaration from the manufacturer stating the stove is eligible. Most manufacturers have a list of stoves which are eligible on their website.  If you can't find it, call them.

In previous years, taxpayers used IRS Form 5695 but this extension was passed at the last minute and it appears that Form 5695 has not been updated.  Nevertheless, the IRS confirms here that high efficiency stoves that use biomass fuel qualify and we know that online service such as Turbotax are integrating the new changes as fast as they can.   

There is a $500 limit is a lifetime limit for all energy efficiency property, including insulation, doors, windows or other wood or pellet stoves. So, if a taxpayer has claimed $300 in previous years, for example, they could only claim $200 on their 2017 taxes for a qualifying stove.

The tax credit can also apply to wood and pellet boilers and furnaces.  Many manufacturers claim that their stoves are 75% efficient for purposes of the tax credit, when in fact they are in the 60s or low 70s.  Just because the manufacturer says the stove is eligible for the tax credit, don't assume you purchased a higher efficiency stove, much less one that is over 75%. However, as long as you have a certificate issued by the manufacturer saying your model is eligible, you can claim the tax credit.  For more on this topic, click here.

Other heating and cooling equipment had far stricter qualification standards to ensure that consumers got a tax credit for a genuinely more efficient appliance or item.  

Natural gas, propane, or oil furnace or hot water boiler with an annual fuel utilization (AFUE) rate of 95 or greater: $150

Split system air source heat pump that meets or exceeds 15 SEER/12.5 EER/8.5 HSPF: $300

Split system central air conditioner that meets or exceeds 16 SEER and 13 EER: $300

Natural gas, propane, or oil water heater which has either an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent: $300

Electric heat pump water heater with an energy factor (EF) of at least 2.0: $300

The 2014 tax break cost taxpayers about $42 billion.  The tax credit for stoves alone is not likely to cost more than $50 million and that’s if a majority of people who bought stoves learn about the credit and take it on their tax return.


2 comments:

  1. Thank you, thank you. Might not have figured out, or understood about woodstove credit w/o you!

    ReplyDelete
  2. This comment has been removed by a blog administrator.

    ReplyDelete