FEDERAL TAX CREDITS FOR  RED SEAL® PRODUCTS

Providing Consumers Tax Credits in 2009-2010 for qualifying

RED SEAL® Products purchased and installed in 2009-2010

The American Recovery and Reinvestment Act of 2009

On February 17, 2009,  the President signed "The American Recovery and Reinvestment Act of 2009" that made some significant changes to the existing energy tax credits that apply to our  RED SEAL® PRODUCTS: 

• RED SEAL® RADIANT BARRIER
• RED SEAL INSULATION & VENTILATION

• The tax credits that were previously effective for 2009, have been extended to Dec. 31,  2010 as well.
• The tax credit has been raised from 10% to 30%.
• The maximum credit has been raised from $500 to $1500 for the two year period (2009-2010) for all improvements combined.
• There are no news if this tax credit will be extended for 2011.

Radiant Barrier Tax Credit Summary:

• For example a Radiant Rarrier insulation product to qualify, its primary purpose must be to save energy and insulate.
• Must be "placed in service" from January 1, 2009 through December 31, 2010.
• Installation costs are not included.
• Must be installed for taxpayers principal residence
• Improvements made in 2009 will be claimed on your 2009 tax forms (filed by April 15, 2010) — use IRS Tax Form 5695 (2009 version) — it will be available late 2009 or early 2010.
• For tax purposes, save your receipt and the Manufacturer's Certification Statement (it will be provided once installation is completed and the project has been accepted by the client).
• Must be expected to last 5 years or have at least 2 year warranty.

RED SEAL® RADIANT BARRIER and RED SEAL® INSULATION products are eligible for the  2009-2010 Tax Credit.

At the completion time of installation we will provide you with a copy of our RED SEAL® RADIANT BARRIER  Manufacturer's Certification . PLEASE SAVE IT FOR YOUR TAX RECORDS if you plan and qualify to claim the Federal Tax Credit for 2009 or 2010.  KEEP in Mind that you do not need to submit this certificate to the IRS with your tax form, but you need to retain it for your tax records.

With the signing of the ARRA, the definition for a qualifying insulation product was changed from previous years’ stimulus packages and this led the reflective insulation industry and consumer base to question whether radiant barriers qualified for the new 2009-2010 tax credits.

Under the ARRA, the qualifying insulation definition is based on the 2009 International Energy Conservation Code (IECC) definition for insulation which reference R-value and U-Values  Because the IECC does not directly reference “radiant barriers,” manufacturers were hesitant to promote their radiant barriers as qualifying for the much desired tax credit.

However, as a result of a recent meeting between the Reflective Insulation Manufacturer Association (RIMA) and the IRS in early December 2009, a presentation case was successfully presented on how a radiant barrier reduces heat transfer (lowers U-Value) and thus was accepted by the IRS.

While not an “official” acceptance of Radiant Barriers on behalf of the IRS at this point, the IRS has communicated that manufacturers presenting a Manufacturer’s Certification Statement covering their radiant barriers shall be deemed valid and qualifying for the 2009-2010 ARRA tax credits until such a date that they may NOT be considered qualifying.

“may NOT be considered qualifying” – What does this mean to you as a consumer?  It means that if you purchase(d) a qualified radiant barrier and you obtain a Manufacturer’s Certification Statement covering the product you purchased, your purchase is eligible for the tax credit, providing you meet the eligibility requirements put forth by the ARRA.  If, at a later date, the IRS deems radiant barriers are not eligible OR the manufacturer’s products are not eligible, you are still guaranteed eligibility for your purchase made prior to this date.

Tax Credit Eligibility Requirements

For a radiant barrier or reflective insulation product to qualify for the tax credit as defined by the ARRA of 2009, it must:

• have a primary purpose to insulate in the tax payer’s primary residence,
• be installed between January 1, 2009 and December 31, 2010,
• be expected to last five years or have at leasr two year warranty
• be accompanied by a Manufacturer’s Certification Statement (while this is not actually filed with your tax return, it should be saved with your purchase and tax return records).

*We strongly advise you to consult with your tax professional in determining actual eligibility for all the qualifying tax credits available .

DEFINITION OF FEDERAL TAX CREDIT

A Federal Tax Credit is a full dollar-for-dollar reduction in the amount of federal income taxes an individual owes as opposed to a tax deduction which is only an expense subtracted from one's adjusted gross income that is used to calculate taxes owed based on one's income tax bracket.

In other words a tax credit is the qualifying amount of $ taken against your total federal tax liability.