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Energy efficient home improvements could help people reduce energy bills and taxes

Homeowners who make improvements like replacing old doors and windows, installing solar panels or upgrading a hot water heater may qualify for home energy tax credits.

Who can claim the credits
Taxpayers making improvements to their principal, or in some cases, secondary residence may be eligible for these credits. In some cases, renters may also be able to claim specific costs. Landlords can't use these credits for improvements made to any homes they rent out. See Form 5695 instructions for more information.

There are two tax credits to help offset costs of making energy efficient improvements.

Energy Efficient Home Improvement Credit
Taxpayers can claim the Energy Efficient Home Improvement Credit only for improvements, additions or renovations to an existing home. It doesn't apply to newly constructed homes. Qualifying costs may include:

Exterior doors, windows, skylights and insulation materials.
Central air conditioners, water heaters, furnaces, boilers and heat pumps.
Biomass stoves and boilers.
Home energy audits.
The amount of the credit taxpayers can take is a percentage of the total improvement expenses in the year of installation:

2023 through 2032: 30%, up to a maximum of $1,200 annually.
Biomass stoves and boilers have a separate annual credit limit of $2,000 annually with no lifetime limit.
Residential Clean Energy Credit
Taxpayers can also claim the Residential Clean Energy Credit for qualifying costs for either an existing home or a newly constructed home. Qualifying costs may include:

Solar, wind and geothermal power generation equipment.
Solar water heaters.
Fuel cells.
Battery storage.
The amount of the credit taxpayers can take is a percentage of the total improvement expenses in the year of installation:

2022 - 2032: 30%, no annual maximum or lifetime limit.
2033: 26%, no annual maximum or lifetime limit.
2034: 22%, no annual maximum or lifetime limit.
To claim these credits, taxpayers should file Form 5695, Residential Energy Credits, with their tax return.

Knowing how scammers pose as the IRS can help taxpayers protect themselves

Crooks are always looking for new ways to scam unsuspecting taxpayers. Scammers impersonate the IRS by phone or email, in person, or by mail or delivery service – and cost people their time and money. By staying vigilant against schemes and scams, taxpayers can protect themselves.

Scammers can pose as the IRS by mail – taxpayers should know the facts
One of the newest and more devious schemes involves mail coming in a cardboard envelope from either a delivery service or the United States Postal Service (USPS). The enclosed letter includes the IRS masthead and wording that the notice is "in relation to your unclaimed refund." The contact information does not belong to the IRS, but the mailing looks official. This scheme seeks sensitive personal information from taxpayers – including driver’s license photos – that can be used by identity thieves to steal the taxpayer’s refund and other sensitive financial information.

It's now easier to spot when it’s a scammer at the door and not the IRS
Scam artists may also appear at the door posing as IRS agents, creating confusion for not just the taxpayers but also local law enforcement agencies. As this scam has grown, taxpayer confusion about home visits by IRS revenue officers has increased.

To help combat these scams, the IRS recently announced that it is ending most unannounced visits to taxpayers by agency revenue officers. In place of the unannounced visits, revenue officers will instead contact taxpayers through an appointment letter, known as a 725-B Letter, and schedule a follow-up meeting. This will help taxpayers feel more prepared when it is time to meet.

Taxpayers who receive a request from IRS in the mail or by phone can always contact IRS customer service to authenticate it.

Scammers may also contact taxpayers electronically
Taxpayers should be on the lookout for a summer surge of tax scams as identity thieves continue sending email and text messages promising tax refunds or offers to help 'fix' tax problems. They may pose as the IRS or tax professionals, urging the taxpayer to click fraudulent links so the identity thieves can steal valuable personal information.

Taxpayers should remember: the IRS never initiates contact regarding a bill or tax refund by email, text or social media.

Issue Number: IR-2022-70
Inside This Issue
For the first time, maximum educator expense deduction rises to $300 in 2022; limit $250 for those filing 2021 tax returns

WASHINGTON – The Internal Revenue Service today reminded teachers and other educators planning ahead for 2022 that they’ll be able to deduct up to $300 of out-of-pocket classroom expenses when they file their federal income tax return next year.

This is the first time the annual limit has increased since the special educator expense deduction was enacted in 2002. For tax-years 2002 through 2021, the limit was $250 per year. This means for people currently filing their 2021 tax returns due in April, the deduction is limited to $250. The limit will rise in $50 increments in future years based on inflation adjustments.

For 2022, an eligible educator can deduct up to $300 of qualifying expenses. If they are married and file a joint return with another eligible educator, the limit rises to $600. But in this situation, not more than $300 for each spouse.

Who qualifies?
Educators can claim this deduction, even if they take the standard deduction. Eligible educators include anyone who is a kindergarten through grade 12 teacher, instructor, counselor, principal or aide in a school for at least 900 hours during the school year. Both public- and private-school educators qualify.

What's deductible?
Educators can deduct the unreimbursed cost of:

Books, supplies and other materials used in the classroom.
Equipment, including computer equipment, software and services.
COVID-19 protective items to stop the spread of the disease in the classroom. This includes face masks, disinfectant for use against COVID-19, hand soap, hand sanitizer, disposable gloves, tape, paint or chalk to guide social distancing, physical barriers, such as clear plexiglass, air purifiers and other items recommended by the Centers for Disease Control and Prevention (CDC).
Professional development courses related to the curriculum they teach or the students they teach. For these expenses, it may be more beneficial to claim another educational tax benefit, especially the lifetime learning credit. For details, see Publication 970, Tax Benefits for Education, particularly Chapter 3.
Qualified expenses don’t include expenses for home schooling or for nonathletic supplies for courses in health or physical education. As with all deductions and credits, the IRS reminds educators to keep good records, including receipts, cancelled checks and other documentation.

Reminder for 2021 tax returns being filed now: Deduction limit is $250
With the tax deadline just around the corner, the IRS reminds any educator still working on their 2021 return that they can claim any qualifying expenses on Schedule 1, Line 11. For 2021, the deduction limit is $250. If they are married and file a joint return with another eligible educator, the limit rises to $500. But in this situation, not more than $250 for each spouse.

Whether a return is self-prepared or prepared with the assistance of a tax professional or trained community volunteer, the IRS urges everyone to file electronically and choose direct deposit for any refund. For details, visit IRS.gov/efile.

In addition, the IRS urges anyone with tax due to choose the speed and convenience of paying electronically, such as with IRS Direct Pay, a free service available only on IRS.gov. For information about this and other payment options, visit IRS.gov/Payments.

This year, the tax-filing deadline is:

Monday, April 18 for most taxpayers.
Tuesday, April 19 for residents of Maine and Massachusetts.
Wednesday, June 15 for most Americans who live abroad.


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