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`Wood is Good, says Obama`

February 17, 2009

Today, President Obama signed the American Recovery and Reinvestment Act of 2009. To promote the use of renewable, domestically produced, carbon neutral fuels, the Act calls for a Tax Credit totalling 30% of the purchase price of any new wood or pellet stove that achieves at least 75% efficiency (up to $1500.00 per household).

"This is a home run," says one Hearth Product Industry spokesman, "In recent speeches and interviews, Obama has repeatedly stressed the need to decrease America's reliance on imported fuels. By signing the %1500.00 wood & pellet stove rebate into law, the President has addressed this need, while at the same time lowering the tax obligations of working Americans, and injecting consumer funds back into the economy."

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Wood Stove Rebate FAQ's

Q: How does the Recovery Act affect the purchase of wood stoves?
A: If you purchase a new, qualifying biomass (wood or pellet) stove between January 1, 2009 and December 31, 2010, you can take a tax credit totalling 30% of the installed price, up to $5,000 (maximum credit $1500).

Q: Could I buy more than one stove and get a 30% credit for each of them on this program?
A: Yes, up to the credit ceiling of $1500.

Q: So, I could buy new stoves for my house, my summer cabin and my rental house for a total of up to $5000, and get a 30% credit (up to $1500) for the total?
A: Nope, the credit only applies only to existing principal residences. Your summer cabin and rental don't qualify.

Q: Does this program apply only to woodstoves?
A: The 30% tax credit also applies to qualifying windows, storm windows, exterior doors, insulation, and certain types of furnaces and water heaters that improve the overall energy efficiency of the home, up to a total of $5,000 (Tax Credit $1500). For more information, click here.

Q: What if I spend a total of $6,000 on my stove installation and other improvements? 30% would be $1800. Would I get the $1800?
A: Nope, the tax credit ceiling on the total of all improvements is $1500.

Q: Is that for each of the two years, or over the two-year course of the program?
A: The $1500 ceiling is on the entire two-year program. If you take a $1000 credit in 2009, you'll have $500 available for 2010.

Q: Will this be some sort of deduction applied to my total wages, like a medical deduction?
A: This is much better: the credit comes straight off the bottom line on your return.

Q: Let's say I buy a Hearthstone Craftsbury in 2009 (Tax Credit $474) and I end up owing $474 taxes for 2009. How much do I pay?
A: Nothing. Your $474 Wood Stove Tax Credit will cancel out your $474 tax obligation.

Q: What if I have a $300 tax refund coming back?
A: You get your refund, plus the $474 Wood Stove Tax Credit on your Craftsbury. Your IRS refund check will total $774.

Q: What if I only paid $400 in taxes last year? Do I still get my $474 Tax Credit?
A: Nope, you get $400. The credit cannot exceed the amount of taxes you paid in.

Q: I am on social security and pay no taxes, can I get the credit?
A: Nada. The credit is only against taxes you paid in (or still owe) for the year you put the stove in service.

Q: Do all wood stoves qualify?
A: Only new stoves that achieve 75% efficiency in IRS-approved Low Heat Value testing qualify for the tax credit.

Q: Why don't they just use the efficiency ratings from the EPA labels?
A: Two reasons. First, the EPA doesn't test for efficiency. All EPA labels simply state 63% efficiency for all non-catalytic stoves, and 72% for all catalytic models. This is a presumed average, not an individual rating. Second, if they used the EPA ratings, not a single wood stove would qualify for the credit.

Q: So, how can I tell which stoves pass IRS testing?
A: Not to worry, sellers of qualified models will not be shy about it. On our wood stove main page, we have subtly labeled all qualifying stoves.

Q: What if I buy a qualified 75% efficiency stove second-hand? Can I take the credit?
A: No, the law specifies that the credit can only be applied to the purchase and installation of new stoves.

Q: Are you sure? I found the bill online at http://www.irs.gov/pub/irs-drop/n-09-53.pdf , and it doesn't say anything about new or used.
A: It helps to have a magnifying glass and a working knowledge of legalese, but it's there alright, in Part 3, Section 2 .05 (1):
"A taxpayer may claim a credit... only if each of the following requirements is satisfied:
(b) The original use of the item commences with the taxpayer."
If you buy a used stove, you're not the original user, and you can't claim the tax credit.

Q: What about the hearth, stovepipe, chimney parts & labor I'll need to complete the installation? 30%?
A: Yes, the 30% credit applies to the total price of the installation, including parts & labor.

Q: What if I buy the stove, hearth, stovepipe and chimney from different companies?
A: Total all receipts related to the installation, and multiply by 30% to determine your credit (up to $1500).

Q: How do I prove to the IRS that I've purchased a qualified stove? Do I send anything in with my tax return?
A: Yes, you must fill out Form 5695, which you can download at http://www.irs.gov/pub/irs-pdf/f5695.pdf. Your credit goes on line 3a. Save your receipts for the stove, parts and labor, and keep them in a safe place along with the Manufacturer's Certificate of Qualified Energy Property. You can download or print Pacific Energy's certificate here, the Bis Ultima and Tradition CE certificates here, and Hearthstone's certificates here.

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Wood is Good, says Obama

Wood Stove Rebate FAQ's

Q: How does the Recovery Act affect the purchase of wood stoves? A: If you purchase a new, qualifying biomass (wood or pellet) stove between January 1, 2009 and December 31, 2010, you can take a tax credit totalling 30% of the installed price, up to $5,000 (maximum credit $1500).

Q: Could I buy more than one stove and get a 30% credit for each of them on this program? A: Yes, up to the credit ceiling of $1500.

Q: So, I could buy new stoves for my house, my summer cabin and my rental house for a total of up to $5000, and get a 30% credit (up to $1500) for the total? A: Nope, the credit only applies only to existing principal residences. Your summer cabin and rental don't qualify.

Q: What if I spend a total of $6,000 on my stove installation and other improvements? 30% would be $1800. Would I get the $1800? A: Nope, the tax credit ceiling on the total of all improvements is $1500.

Q: Is that for each of the two years, or over the two-year course of the program? A: The $1500 ceiling is on the entire two-year program. If you take a $1000 credit in 2009, you'll have $500 available for 2010.

Q: Will this be some sort of deduction applied to my total wages, like a medical deduction? A: This is much better: the credit comes straight off the bottom line on your return.

Q: Let's say I buy a Hearthstone Craftsbury in 2009 (Tax Credit $474) and I end up owing $474 taxes for 2009. How much do I pay? A: Nothing. Your $474 Wood Stove Tax Credit will cancel out your $474 tax obligation.

Q: What if I have a $300 tax refund coming back? A: You get your refund, plus the $474 Wood Stove Tax Credit on your Craftsbury. Your IRS refund check will total $774.

Q: What if I only paid $400 in taxes last year? Do I still get my $474 Tax Credit? A: Nope, you get $400. The credit cannot exceed the amount of taxes you paid in.

Q: I am on social security and pay no taxes, can I get the credit? A: Nada. The credit is only against taxes you paid in (or still owe) for the year you put the stove in service.

Q: Do all wood stoves qualify? A: Only new stoves that achieve 75% efficiency in IRS-approved Low Heat Value testing qualify for the tax credit.

Q: So, how can I tell which stoves pass IRS testing? A: Not to worry, sellers of qualified models will not be shy about it. On our wood stove main page, we have subtly labeled all qualifying stoves.

Q: What if I buy a qualified 75% efficiency stove second-hand? Can I take the credit? A: No, the law specifies that the credit can only be applied to the purchase and installation of new stoves.

Q: What about the hearth, stovepipe, chimney parts & labor I'll need to complete the installation? 30%? A: Yes, the 30% credit applies to the total price of the installation, including parts & labor.

Q: What if I buy the stove, hearth, stovepipe and chimney from different companies? A: Total all receipts related to the installation, and multiply by 30% to determine your credit (up to $1500).