Tax credits: Whats New for 2016

This year, congress passed some laws to assist taxpayers finacially. These credits include the American Opportunity Credit, Residential Energy Efficiency Credit, and the Premium Tax Credit. We will discuss each credit below.

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  • American Opportunity Credit
  • Residential Energy Credit
  • Premium Tax Credit
  • Many More!
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American opportunity credit

The new credit modifies the existing Hope Credit, making the credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.

Residential energy credit

Many of the caps, or limits on the tax credit amount you can claim, have been eliminated.

With the exception of a biomass stove, you may be able to take a credit of 30% of your costs of qualified solar electric property, solar water heating property, fuel cell property, small wind energy property, and geothermal heat pump property. This includes labor costs properly allocable to the onsite preparation, assembly, or original installation of the property and for piping or wiring to interconnect such property to the home.

Biomass Stove 30% of cost, up to $1,500*

Stove which burns biomass fuel to heat a home or heat water with a thermal efficiency rating of at least 75%.

Biomass fuel is defined as "Any plant-derived fuel available on a renewable or recurring basis, including agricultural crops (corn) and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers."