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18 1984 Tax Preparation Guide Some energy savers may not claim tax credit Taxpayers claiming the residential energy tax credit should make cer­ tain that their expenses qualify for the credit, the Internal Revenue Ser­ vice says. The IRS has noticed that some tax­ payers claim the residential energy tax credits for materials and equip­ ment which clearly do not qualify for the credits. In addition, credits have also been claimed by taxpayers who received subsidized energy financ­ ing. Subsidized energy financing is financing under any federal, state or local programs that are supported by tax revenues. Tax exempt bonds, used to provide funds under such programs, are examples of subsi­ dized energy financing. Energy tax credits are designed to encourage energy saving and the de­ velopment of renewable energy sources, and are divided into two types: the credit for energy conser­ vation items added to homes subs- tially completed before April 20,1977; and the credit for renewable enerev sources, the IRS says. The credit for energy conservation is 15% of the first $2,000 spent on items to save energy, up to a maxi­ mum credit of $300. The credit for renewable energy source devices is 40% of the first $10,000 spent on so­ lar, geothermal, or wind-powered equipment up to a maximum of Ask Me About Prudential Mutual Funds. Get Professional Mutual Funds Management For As Little As $1,000 Investment. Prudential's family of ten different Mutual Funds offers attractive choices, including Money Market Funds, for every kind of investor. Most can be opened for an initial investment of just $1,000. All feature quick access to your money plus professional Prudential management. For prospectuses which contain complete information, including charges and expenses, contact me: « (Read prospectuses carefully before you invest or send money.) BILL NEUMANN, CLU CHARTERED FINANCIAL CONSULTANT 4306 B. W. Crystal Lake Road McHenry, Illinois 60050 Office Telephone: 344-5858 (c 1983 The Prudentiol Insurance Company of Americo Newark N.J. $4,000. Examples of qualifying energy converation items are: insulation de­ signed to reduce heat loss or heat gain in the home: storm or thermal windows or doors for the outside of the house; caulking or weather strip­ ping of outside doors and windows; clock thermostats or other automatic setback thermostats; furnace repla­ cement burners; flue opening modi­ fications and ignition systems that replace a gas pilot light; meters that show the cost of energy use. Examples of qualifying renewable energy source items are: solar en­ ergy equipment for heating or cool­ ing the home or for providing hot water or electricity for use In the home; wind energy equipment for generating electricity; geothermal energy equipment. There has been .much publicity by companies that sell energy saving devices, materials and renewable energy source equipment. Most of the taxpayers who invested in the materials and equipment were en­ couraged to do so in order to reduce energy costs and also because of tax credit incentives. The IRS has discovered some tax­ payers who claimed the credit on non qualifying items. The IRS be­ lieves this to be a misunderstanding by taxpayers of what qualifies for the credit. Some advertisrs of mate­ rials and equipment do not specify in their advertisements which portion of the product qualifies for the credit. Examples of items that do not qualify are: House Siding. This is condidered to be decorative although it may pro­ vide some insulating effect. Ho­ wever, if an insulating barrier is placed between the house and the siding, the cost of the insulating ma­ terial would qualify for the credit. Greenhouses. Taxpayers have mista­ kenly claimed the entire cost of a greenhouse. However, this type of a structural unit serves a dual purpose or funcation. Although the structure itself will not qualify for the credit components installed in the structure designed to absorb, store and distrib­ ute heat into the home do qualify for the credit. Other items that do not qualify are: wood buring stoves; glass fire­ place screens; heat pumps; replace­ ment furnaces; and wood paneling. IRS encourages taxpayers to take full advantage of the residential en­ ergy tax credit, but also to be cer­ tain the devices or materials purchased qualify for the credits. For additional information, tax­ payers can order the free IRS Publi­ cation 903 Energy Credits for Indi­ viduals by using the handy order form in the tax package. File early C & S ULTRALIGHTS LOCATED AT GALT AIRPORT Fly Before You Buy! • Skymaster Ultralight Flight Training by A.S.F. Registered Examiners. • Ultralight Rental Available Dealer for: Robertson B1-RD Fisher FP-101 & 202 INTERESTED? CALL 815-648-2089 Come Fly With Us! •¥::*? .: : We Offer: • Flight Instruction • Plane Rental • Charter Flights • Plane Sales & Service GALT FLYING SERVICE, INC 5112 GREENWOOD ROAD, WONDER LAKE, ILLINOIS 60097 815-648-2433