Tax Credits – A Simple Way to Reduce Your Tax Liability
By Lisa E. Cotanch, CPA

Syracuse, NY – March 1, 2007 - How can I prevent my taxes from going through the roof? If it’s a brand new roof, you may be able to use it to reduce your tax liability!

Taking advantage of deductions that may be available to you is one way to lower your taxes, but let’s not forget about tax credits. A tax credit, simply stated, is a dollar for dollar reduction in your tax liability. A tax credit can actually be more valuable than a tax deduction, which is a percentage reduction in your tax liability. Here are some great examples of tax credits.

The Energy Savings Tax Credit is available to individuals for the 2006 and 2007 tax years. This credit deals with home improvements placed in service within these two years. When you improve your home to be more energy efficient, you are eligible for a 10% credit on what you spend. Some of the allowable energy efficient expenditures are new insulation, exterior windows (including skylights) and doors, metal roofs and other improvements. You could be eligible for a 100% credit on expenditures for new circulating fans, natural gas, propane or oil furnace or hot water boilers, among others. These credits are combined to limit you to a lifetime credit of $500 per taxpayer.

Another credit is for hybrid vehicles such as the Honda Accord Hybrid, Nissan Altima Hybrid, Saturn Vue Green and even four wheel drive vehicles such as the Chevrolet Silverado Hybrid and GMC Sierra Hybrid, among many others. Businesses as well as individual taxpayers who purchase an alternative motor vehicle after 12/31/05 are eligible for this credit.These vehicles have become increasingly popular because of environmental issues as well as their tax savings. If you want to save money at the pump and on your tax bill, this is a great way to do both!

There is also a credit for the telephone excise tax paid on long distance or bundled telephone service. All individuals and businesses that paid for long-distance service billed after February 28, 2003 and before August 1, 2006, are eligible for a refund.They can then claim the refund as a tax credit on their 2006 tax return. Individuals can calculate the amount of credit by adding the excise tax paid on the 41 months worth of bills, or can take the standard amount (see IRS table). These are a few examples of ways to minimize your tax burden. For more information on how you can take advantage of these tax credits or other tax savings strategies, please consult your tax advisor.

Lisa Cotanch, CPA is a tax manager with Green & Seifter, Certified Public Accountants, PLLC and is experienced in accounting and taxation for businesses and individuals. She can be contacted at (315) 701-6333 or LCotanch@GreenSeifterCPAs.com.

Green and Seifter CPAs offers a wide array of professional services spanning decades of experience in the areas of accounting, auditing, bookkeeping, financial planning, fraud, and taxation to individuals and businesses throughout Central New York.

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