Most of the improvements must be placed in service January 1, 2009 through December 31, 2010. Here is a summary of the energy efficient upgrades and the tax credit available. For specifications of each, see the Federal Tax Credits for Energy Efficiency.

Federal Energy Efficiency Tax Credits

• Insulation. Tax Credit: 30% of cost, up to $1,500.
• Windows and Doors. Including exterior windows and skylights, storm windows, exterior doors, and storm doors. Tax Credit: 30% of cost, up to $1,500.
• Roofing. Including metal and asphalt roofs. Tax Credit: 30% of cost, up to $1,500.
• HVAC. Including central a/c, air source heat pumps, natural gas or propane furnaces, oil furnaces, hot water boilers, and air circulating fans. Tax Credit: 30% of cost, up to $1,500.
• Water Heaters. Tax Credit: 30% of cost, up to $1,500.
• Biomass Stove. Tax Credit: 30% of cost, up to $1,500.
• Geo-Thermal Heat Pump. Tax Credit: 30% of cost.
• Solar Energy Systems. Including solar water heaters and photovoltaic systems. Tax Credit: 30% of cost.
• Residential Small Wind Turbines. Tax Credit: 30% of cost.
• Residential Fuel Cells. Tax Credit: 30% of the cost, up to $500 per .5 kW of power capacity.

Source: Federal Tax Credits for Energy Efficiency

2008 Home Purchases

Buyers can get a $7,500 First Time Home Buyer Tax Credit. The credit is 10% of the purchase price of your home, capped at $7,500. The credit is a 0% interest, 15 year loan from the government and it must be paid back beginning 2 years later.

2009 Home Purchases

Buyers can get a $8,000 First Time Home Buyer Tax Credit for 2009 home purchases. It applies to homes purchased between January 1, 2009 through November 30, 2009. The credit, which is refundable, is $8,000 or 10% of the home’s value, whichever is less.

You can file for either the 2008 or 2009 first time home buyer tax credit on your 2008 taxes using Form 5405.

The Midwestern Disaster areas include Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska, and Wisconsin. Specific counties are listed in Publication 4492-B.

Tax Changes

Here are highlights of some of the additional tax credits and tax changes you can take advantage of:

• Hope Credit: The maximum is increased from $1,800 to $3,600 per student.
• Lifetime Learning Credit: The maximum is increased from $2,000 to $4,000 per return.
• Casualty Losses: Casualty losses from the disasters are not subject to the $100 or 10% of AGI limits.
• Debts Not Taxable: If a mortgage is canceled due to the disaster, the forgiven debt will not be taxable.
• Housing of Displaced People: If you provide housing for a person displaced by the disasters, you can claim an additional exemption of $500 per person.

There are other tax law changes that apply to the disaster areas including changes to the earned income tax credit, use of retirement funds, and charitable miles. See Publication 4492-B for complete details.

Earned Income Tax Credit Requirements

The maximum 2008 income for the EITC is as follows:

• More than one qualifying child: You must earn less than $37,783 ($39,783 if married filing jointly).
• One qualifying child: You must earn less than $33,241 ($35,241 if married filing jointly).
• No qualifying children: You must earn less than $12,590 ($14,590 if married filing jointly).

Qualifying children must meet relationship, age, and residency tests. If you don’t have children, you must be age 25 – 64 to qualify for the earned income credit.

Other EITC requirements:

To get the earned income tax credit, you must have earned income and file a tax return. You cannot claim foreign earned income and your investment income must be $2,900 or less.

In addition, you must have a SSN and be a U.S. citizen or resident alien all year. You cannot file as married filing separate.

More information is available in Publication 596.

Who can claim the Saver’s Credit:

• Individuals (and married filing separately) with incomes up to $26,500 in 2008 ($27,750 in 2009).
• Married couples filing jointly with incomes up to $53,000 in 2008 ($55,500 in 2009).
• Head of households with income up to $39,750 in 2008 ($41,625 in 2009).

Eligibility guidelines:

• You must be at least 18 years old.
• You cannot be a full-time student.
• You cannot be claimed as a dependent on another person’s return.

The credit is in addition to other tax benefits you receive from contributions, like tax deferrals on 401, and deductions on IRA contributions.

The credit, which is a percentage of the contribution ranging from 10% to 50% decreases as your income increases. It can be figured using Form 8880.