Window tinting can mean a tax credit

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With the promise of cash back from Uncle Sam, homeowners flocked for the last few years to home-improvement stores for products to make their residences more energy efficient. By adding insulation, installing new windows or converting to a solar water heater, many homeowners recouped on 2006 returns, and might be able to do so again on their 2007 tax filings, part of their energy-saving upgrade costs via a tax credit.

But window film, a relatively easy fix that typically costs only a fraction of replacing a home’s drafty old windows, was overlooked by most homeowners. The reason: Window tinting wasn’t specifically mentioned as an eligible tax credit option under the Energy Tax Incentives Act of 2005.

The word finally got out in late 2006 when the Internal Revenue Service told the window film industry that its product does indeed fall under the category of “other” energy saving home improvements.

The slow start for the window film write-off means that many homeowners didn’t take advantage of the energy improvement before the installation deadline arrived on Jan. 1. But if you did add this simple and cost-effective upgrade to your home’s windows last year, be sure to claim the credit if you can on your 2007 return.

Window film meets the energy standards because it can help reduce a home’s air conditioning needs. According to California Energy Commission calculations, 30 percent of a structure’s cooling requirements are due to solar heating through windows and door glass.

“Applying solar control film to glass rejects up to 80 percent solar energy, and can reduce your energy costs between 30 percent and 50 percent,” says Robert Kerr, president of Epic Glass Tinting, which has operations throughout California. “It’s a win-win situation, especially with the new tax credit.”

The win for the homeowner is a 10 percent tax savings on the cost of solar-control window film. Because it’s a tax credit, the consumer gets a dollar-for-dollar tax bill reduction.

Slow start for film
For most of 2006 when the new tax credits first appeared, window film manufacturers didn’t get a chance to tout the tax break along with their product’s energy-saving benefits.

“It was late November 2006 before we got a positive response from the IRS,” says Darrell Smith, executive director of the International Window Film Association. “Then we had a couple of weeks when we reconfirmed that our and their understanding was the same. In early December, we notified our manufacturers that they could go ahead with certifying products.”

The Martinsville, Va.-based trade association spearheaded the effort to make sure window film is tax-break eligible. But that was only the first step, and it doesn’t mean that every window film on the market will get you the tax credit.

Mapping your tax credit
The first step is for the manufacturer to determine which product qualifies, and that is a comprehensive process. Window film is created to meet the conditions of eight U.S. climate zones, ranging from the northern reaches of Alaska to the island locales of Hawaii, Puerto Rico, Guam and the Virgin Islands.

Maps of the zones are available at several manufacturer Web sites, including a color depiction at Madico and a larger, black-and-white version in 3M’s window film certification document.

— Updated: Feb. 25, 2008

Generally, manufacturers produce different types of products for each zone, and some window-film makers might find that some tints don’t meet the standards. Even when film does qualify, a manufacturer might decide not to tax-certify every product line for business or marketing reasons; for example, a company might opt to certify only its more exclusive window films.

That means the consumer must carefully check the product’s packaging or the company’s Web site for verification that the film meets the energy-efficiency tax credit standards. According to the IRS, customers typically can rely on such manufacturer information in claiming the credit.

Picking your price range
Consumers also will want to determine if they have price choices between various tax-approved window tints.

The film generally runs from $3 to $12 per square foot. But the types of windows it covers will determine your ultimate cost.

Larger panes will cost you less because installation is easier. Consider, for example, a patio door with two panels, one stationary and one that slides. The total square footage for an average 6 foot door opening is 36 square feet. That’s a lot of film, but it’s going on just two large panes.

However, if your patio entrance is a French door with 36 individual panes, your price for window film escalates because the installer will apply tint to many more, smaller individual panes.

Another factor to remember: Only the price of the film, not the installation expense, is eligible for the credit. So if you choose a less expensive film to offset the application costs, it won’t help you on your tax return.

Also keep in mind that the tax credit for window tinting is limited to $500, and that cap amount includes any previous energy efficient upgrades you made in this general energy-efficiency category last year. So if you took a $400 credit on your 2006 return for insulation, you’ve only got $100 left to apply to your 2007 tax bill.

Claiming the credit
If, however, you find that you can claim the tax credit this filing season, the process is relatively simple.

Dig out your original invoice showing how much you paid for the window film. Make sure it differentiates between the film itself and any installation costs.

Download the manufacturer’s certification statement for your climate zone from the company’s Web site or make sure the information is included in the film’s packaging.

You don’t need to send any of this documentation to the IRS, but you will want it for your records if the agency subsequently questions your credit claim.

Then submit IRS Form 5695 with your Form 1040 to claim the credit for your window tinting.

And if you didn’t get all your windows tinted last year, keep an eye on Congress. There’s been talk of reauthorizing the tax break for window film and other relatively simple home energy efficiency improvements for 2008. You might get another tax credit chance next year, too.

— Updated: Feb. 25, 2008