CPA and TurboTax expert Lisa Greene-Lewis clears up the confusion about recent changes to home energy credits provided by the Inflation Reduction Act, and explains how the law also affected tax credits for electric cars, and who can qualify for them.
Read the transcript below or watch the video above.
Video transcript:
Tracy Byrnes: For those of you who are out there trying to do right by this world, Uncle Sam is paying attention. There are energy-efficient tax credits available to you. And you should know what they are. Lisa Greene-Lewis, TurboTax expert and CPA, is here with us right now. I think they're a little bit confusing. So I'm glad we're talking about this. So what's new? What changed in 2023 that we need to know about?
Lisa Greene-Lewis: Yes, so there are changes to the energy-efficient credits for items you put in your home, like windows and doors. The big change in that is, before it was up to $500 of a credit, depending on what you were placing in your home. Now it's up to $1,200 for windows and doors.
And then also one big change. It used to be a $500 lifetime credit. It's no longer lifetime, so you can get that $1,200 every year. So windows are expensive. So maybe you might want to replace a few this year, and you get the credit, and then you would be able to replace them in a following year, and get the credit. So that's another big change.
And then also for solar. So this was actually starting in tax year 2022. It was supposed to be going to 26% on solar. With the Inflation Reduction Act, it changed to 30%, and that is still continuing for tax year 2023.
Tracy Byrnes: That is a great tip, Lisa, to space out, especially like where we are in the year. If you have a big project coming up, really think about this. And maybe do half this year, or half next year, take advantage. What's going on with the EV world, the car world? Because I everyone around me, I feel like lately needs to plug a vehicle in.
Lisa Greene-Lewis: Yes, so there were a lot of changes to the electric vehicle credit with the Inflation Reduction Act. The biggest changes are, you can still get the $7,500 credit.
They have changed that. You no longer have to look at how many models were manufactured. Years ago, for instance, Tesla got up to 200,000 of a certain model manufactured, so people can no longer get that credit. But that has gone away.
But what has also been implemented, there are income limits related to if you can get the credit. So it's $300,000, married filing jointly, $150,000, single. And then there are also income limits based on the electric vehicle that you purchase.
So a SUV can be up to $80,000, and a car up to $50,000. And then also final assembly has to be done in the United States. So there are some more things that you have to look at in order to get the credit. And then something else new, you can get a credit of up to $4,000 for a used electric vehicle, but there's also income limits on that.
Tracy Byrnes: That is amazing stuff. And my guess is TurboTax will walk you through all this to help you figure out all the ins and outs. I have to believe though that we have to keep certain documentation for all of this. So what do I need to make sure I have backup in case the IRS starts knocking one day, as far as a car and the home repairs. What kind of paperwork do we need?
Lisa Greene-Lewis: Yes, I would definitely have your contract or purchase agreement when you bought the car, because you will need information from that agreement when you file your taxes. You need information like the VIN number, the date. Also with the electric vehicle credit, a lot of states, they do give a rebate or credit. So you will have to provide that information to your state as well. And then the same for anything that you put in your home that's energy efficient, you'll need information from your receipts.
Tracy Byrnes: It's good stuff. I think this is really important, and people should pay attention to this. And, again, it's early enough in the year, where you have the time to get the paperwork together. Lisa Greene-Lewis, TurboTax expert. Thank you so much for sharing all that.
Lisa Greene-Lewis: Thank you for having me.
Editor's Note: The content was reviewed for tax accuracy by a TurboTax CPA expert for the 2022 tax year.
