From the Buffalo News
http://www.buffalonews.com/business/article642859.ece

The Nonbusiness Energy Property Credit is aimed at homeowners installing energy efficient improvements such as insulation, new windows and furnaces. The credit is more limited than in the past years, but can still provide substantial tax savings.

• The 2011 credit rate is 10 percent of the cost of qualified energy efficiency improvements. Energy efficiency improvements include adding insulation, energy-efficient exterior windows and doors and certain roofs. The cost of installing these items does not count.

• The credit can also be claimed for the cost of residential energy property, including labor costs for installation. Residential energy property includes certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass fuel.

• The credit has a lifetime limit of $500, of which only $200 may be used for windows. If the total of nonbusiness energy property credits taken in prior years since 2005 is more than $500, the credit may not be claimed in 2011.

• Qualifying improvements must be placed into service to the taxpayer’s principal residence located in the United States before January 1, 2012.

Homeowners going green should also check out the Residential Energy Efficient Property Credit, designed to spur investment in alternative energy equipment.

• The credit equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property.

• No cap exists on the amount of credit available except for fuel cell property.

• Generally, labor costs are included when figuring this credit.

Not all energy-efficient improvements qualify for these tax credits, so homeowners should check the manufacturer’s tax credit certification statement before they purchase. Taxpayers can normally rely on this certification statement which can usually be found on the manufacturer’s website or with the product packaging.

Eligible homeowners can claim both of these credits on Form 5695, Residential Energy Credits when they file their 2011 federal income tax return. Because these are credits and not deductions, they reduce the amount of tax owed dollar for dollar. An eligible taxpayer can claim these credits regardless of whether he or she itemizes deductions on Schedule A.

One method utilized to determine disposable income is to net the totals found on bankruptcy Schedules I (income) and J (expenses). The calculation is simply to debtor’s gross monthly income less all reasonable and necessary monthly expenses for the household.

In computing expenses, many debtors forget to list items paid once or twice a year. These expenses should be included. For example, tax return preparation costs of $350.00 per year translates into approximately $29.00 per month. Accordingly, that amount should be included on Schedule J. Oil or propane deliveries may occur only three or four times a year, but the total amount should be pro rated into the monthly expense budget. Car repairs, haircuts, school trips and other non-monthly expenses should also be handled the same way.

Certain expenses not included in determining monthly disposable income include any unsecured debt included in the bankruptcy. Monthly credit, store and gas cards, and unsecured personal loans, which are expected to be either discharged in full or paid at a percentage through the plan, should not be deducted on Schedule J and not included in the disposable income computation. Voluntary retirement account payments may not be considered “reasonable and necessary.”

When preparing an expense list for your attorney in anticipation of filing for bankruptcy, don’t forget to include irregular expenses, as they can make an impact ont he amount amount truly at your disposal to fund your plan.