Waiting to Improve Your Home in 2006 Just Might Improve Your Tax Situation

PARSIPPANY, N.J., January 5, 2005 — Home improvements may do more than just beautify and increase the value of your home, now they can bring you even greater tax savings. Jackson Hewitt Tax Service(R) (NYSE: JTX) spotlights the new Energy Policy Act of 2005, which goes into effect on January 1, 2006. The new tax law provides significant tax credits for certain energy-efficient home improvements, possibly giving some homeowners an incentive to delay making that home improvement until after the first of the year.
"In 2006, several new credits will be available to homeowners who make energy-saving improvements to their single family or multi-family homes, townhouses, co-ops and condominiums," said Mark Steber, Vice President of Tax Resources at Jackson Hewitt Tax Service. "These new credits may reduce your federal income tax due."
Home Improvements
Taxpayers will be allowed a personal credit of 10 percent of the amount spent, up to a $500 lifetime limit, for insulation, certain metal roofs with appropriate pigmented coatings and exterior doors and windows, including skylights. New energy-efficient main circulating fans, furnaces, hot water boilers, heat pumps, water heaters and central air conditioners also qualify for the new credit, but are subject to individual dollar limitations.
For example, if Joe spends $2,000 to replace the windows in his home in January 2006 with new, energy-efficient windows, he would be eligible for a credit of $200. If he also adds three new skylights for a total cost of $2,500 he would be eligible for an additional $250 credit. The total energy credits available for Joe on his 2006 return would be $450, with a $50 credit remaining under the lifetime limit to use for any additional improvements in the future.
Solar Power
Another set of new credits for homeowners is grouped under the title "Credit for Residential Energy Efficient Property." These credits apply to various types of energy including solar cells and solar water hot water heaters. For example, if Sue installs a solar hot water heater in January 2006 for $6,000, she would be eligible for a credit of $1,800. However, solar water heating systems for swimming pools, spas and hot tubs do not qualify under the new act.
"Making energy-efficient home improvements will benefit taxpayers in two ways — lower utility bills and decreased taxes," adds Steber. "To take full advantage of the new credits this act provides, it's imperative to select qualifying products and determine how the credit will affect your tax situation. Be sure to consult a tax professional before purchasing energy- efficient products for your home to ensure that they are included in the new Energy Policy Act."
The tax professionals at Jackson Hewitt Tax Service can assist in determining qualifying home improvements. To locate the office nearest you, call 1-800-234-1040, or visit http://www.jacksonhewitt.com and use the Office Locator.
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. (NYSE: JTX) is the second largest tax preparation service company in the United States, with over 5,400 franchised and company-owned offices in 49 states and the District of Columbia. Specializing in electronic filing (IRS e-file), the Company provides full service, individual federal and state income tax preparation and facilitates related financial products. Most Jackson Hewitt offices are independently owned and operated. Jackson Hewitt is based in Parsippany, New Jersey. More information about the Company may be obtained by visiting the Company's Web site at http://www.jacksonhewitt.com.
SOURCE Jackson Hewitt Tax Service Inc.
Sheila Cort,
Vice President, Corporate Communication,
+1-973-630-0680,
Sheila.cort@jtax.com, or
Allison Jackson,
Senior Manager, Communications,
+1-973-630-0681,
allison.jackson@jtax.com,
both of Jackson Hewitt Tax Service Inc.