By: Justin P. Callaham, LL.M.
Clark, Campbell, Lancaster & Munson, P.A.

Q: Planning ahead for my 2016 taxes, can I get tax credits or deductions for installing energy efficient products in my home?

A: Yes, at least two federal tax credits are available for such installations during 2016. The federal Protecting Americans from Tax Hikes Act of 2015 extended the Residential Energy Efficient Property (“REEP”) credit through 2021. The REEP credit is equal to 30% of all qualified solar electric and solar water heating property expenditures made during the year. Solar electric expenditures are incurred purchasing or installing devices using solar power to generate household electricity. Solar water heating expenditures require that the device heats water used in your home and derives at least half of its energy from the sun. For example, if during 2016 you pay $6,000 to purchase and install solar panels at your home and an additional $4,000 for a pool heater deriving at least half of its energy from the sun, you would be entitled to a $3,000 (or 30% of the $10,000 total expense) REEP credit against your 2016 federal income taxes. To receive the full benefit of the REEP credit program, you must make the qualified expenditures before the end of 2019, as the applicable credit will be reduced to 26% in 2020 and 22% in 2021.

In addition to the REEP credit, Congress also extended the non-business energy property credit. Under that program, you will receive a credit equal to 10% of all amounts paid for qualified energy efficient improvements, which can include insulation, exterior windows, skylights, exterior doors, and certain roofs. To qualify, the improvements must meet or exceed Version 6.0 of the Energy Star program requirements set by the Environmental Protection Agency. Generally, a product’s packaging will list their Energy Star rating. This credit is nonrefundable and cannot exceed $500 during all taxable periods, and no more than $200 of the credit may be attributable to windows. This credit was retroactively extended, meaning that you also receive a credit for qualifying expenditures made during 2015.

The January 28th edition of “The Law” will discuss so-called “emotional support animals”.

 Justin Callaham is an attorney with the Lakeland law firm Clark, Campbell, Lancaster & Munson, P.A. Questions can be submitted online to thelaw@clarkcampbell-law.com.

By: Clark, Campbell, Lancaster & Munson, P.A.

Q: During the Christmas season I donate money and toys to various organizations. Are these donations tax deductible?

A: Yes, in certain situations charitable donations are tax deductible; however, the situations in which an individual taxpayer may claim a deduction for such donations are relatively limited. As an initial matter, a charitable donation is the donation of money or property to an organization without the actual or anticipated receipt of a benefit. If a donation entitles an individual to merchandise, goods, or services, including admission to a charity ball, theatrical performance, or sporting event, the charitable donation is only that portion of the donation that exceeds the fair market value of the benefit received.

Charitable donations are tax deductible only if the individual taxpayer itemizes his or her deductions and only if the charitable donations were made to an organization that qualifies under Section 170(c) of the Internal Revenue Code. The IRS maintains a searchable database of qualifying organizations that may be accessed at http://apps.irs.gov/app/eos/. Furthermore, the amount of the tax deduction an individual taxpayer may claim for charitable donations in a given year is capped at fifty percent (50%) of the individual’s adjusted gross income. This cap is lowered to thirty percent (30%) of an individual’s adjusted gross income for charitable donations to certain private foundations, veterans’ organizations, fraternal societies, and cemetery organizations.

Finally, most charitable donations must be substantiated. Donations of household items, such as toys, clothes, furniture, and appliances, worth $250.00 or more must be substantiated by a written acknowledgement from the charity receiving the donation. Such acknowledgement must include the name of the charity receiving the donation, the date of the donation, and a reasonably-detailed description of the items donated. Donations of money, regardless of the method of payment or amount, must be substantiated by a bank record or a written acknowledgement from the charity receiving the donation. Cancelled checks and bank, credit union, or credit card statements are generally sufficient to substantiate a donation of money. Due to these substantiation requirements, you should ensure that you obtain a written acknowledgement when you donate cash or significant amounts of property.

The January 1^st edition of “The Law” will discuss gift certificates, credit memos and refunds. Questions may be submitted online to thelaw@clarkcampbell-law.com.