If you have extra money for home improvements, this is the year to do them. Several tax credits are being offered by the federal government, courtesy of the American Recovery and Reinvestment Act, that will help you recoup some of the cash spent on increasing your home’s energy efficiency, which lowers monthly bills as well.  

Some qualifying improvements include work that every home needs now and then, like a new roof, new windows and doors, water heaters, and heating and cooling systems. Some are more involved, like installing a wind or solar energy system.

To qualify for tax credits, improvements must be made on the owner’s primary residence. However, not every product qualifies, even those with an Energy Star seal, the Environmental Protection Agency’s standard for energy-efficient consumer products.

As I discovered too late, a roofing material that my insurance company told me would give me a discount on my homeowners’ premium does not qualify for a federal tax credit. After a call to the manufacturer’s 800-number, I learned that only its commercial-grade products qualified. Even the new skylights had a catch: If the purchase had been made prior to June 1, they qualified for the tax credit; after that, the answer is unclear because of various specs that are still being ironed out. We’ll need to do some digging to get those answers, so lesson learned: ask your contractor for all receipts and product stickers.

If you purchase the right products, you can take a tax credit for 30% of the improvement cost up to $1,500 total for the following:

• Windows and doors (energy-efficient skylights, storm windows, exterior windows, storm doors, exterior doors)
• Roofing and insulation (metal or asphalt shingles)  
• Heating and cooling systems (energy-efficient central air-conditioning units, oil and gas furnaces)
• Water heaters (energy-efficient gas, oil, or propane water heaters; electric heat pump water heaters)

For windows, doors, insulation, and other similar projects that tighten up the “shell” of your home, the credit is limited to the cost of materials, according to USA Today. But if you buy a new air conditioner, furnace, heat pump, or boiler that meets the energy-efficient guidelines, you can include the cost of installation in calculating the credit. Solar water heaters, geothermal heat pumps, and wind energy systems are eligible for a tax credit of up to 30% of the cost, with no caps. These tax credits are available through 2016, and both labor and materials qualify.

An extensive list of qualifying home improvements is available at the Energy Star Web site, so check there before starting any projects. Also consider consulting the IRS Web site or a tax professional. Get several estimates for projects. Tax credits are available no matter which contractor you use. Just make sure your contractor breaks down the bills, showing both labor costs and materials costs separately. Keep a copy of the receipt and the Manufacturer’s Certification Statement for your records.

Other credits may be available to you as well. Find out if your state or city has additional rebate programs by visiting the Database of State Incentives for Renewables & Efficiency Web site and clicking on your state.