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What is an Air Conditioner Tax Credit?

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  • Written By: Patrick Roland
  • Edited By: R. Halprin
  • Last Modified Date: 17 November 2016
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An air conditioner tax credit is an incentive to upgrade cooling appliances created by the U.S. government. These federal tax credits were included in the American Recovery and Reinvestment Act of 2009 and refunds a percentage of new air conditioner costs to purchasers. This credit only applies to the purchase of specific, energy-efficient models of air conditioners. Taxpayers must save documentation of the purchase and file specific tax forms in order to receive the credit.

The plan to provide citizens with an air conditioner tax credit stems from the American Recovery and Reinvestment Act of 2009. The law aims to aid environmental conditions by encouraging citizens to get rid of inefficient air conditioners for newer, more efficient models. This credit is multitiered, providing different returns on investments depending on the purchase price of each air conditioner; the first level returns 10% of the purchase price up to $500 U.S. Dollars (USD), not including new construction and rentals by the end of 2011. The second level returns 30% with no upper limit on all homes by the end of 2016. The third level refunds 30% of the cost, up to $500 USD per .5 kW of power capacity by the end of 2016, excluding rentals and second homes.

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The main stipulation guiding the air conditioner tax credit is that new models have to meet specific environmental standards. Only home cooling units that meet particular efficiency ratings qualify for purchase. Individual units must have an energy efficiency rating greater than 13 and a seasonal energy efficiency rating higher that 16. Central air units must have a rating higher than 12 and 14. These figures are provided in the specifications of new air conditioning units.

The documentation and receipts of a new air conditioner are important to redeeming an air conditioner tax credit. Also important is the manufacturer's certification statement included in the unit. These documents do not need to be submitted with the tax return, but information must be listed on individual tax forms.

Filing taxes is the key element to receiving a refund from the air conditioner tax credit. Taxpayers must fill out line 52 of the 1040 tax form and also fill out Form 5695. In general, the tax credit is granted to purchasers who qualify for a tax refund or the money is applied to an Internal Revenue Service debt for taxpayers with a tax liability.

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