What is the Biomass Stove Tax Credit? Do I Qualify for the Biomass Stove Tax Credit?
The new Sec. 25(D) tax credit is for qualified models and installation and is at 26% throughout 2021 and 2022 before decreasing to 22% in 2023. Currently, Central Boiler Classic Edge 360, 560 and 760 HDX models qualify for the credit. The Maxim M255 PE qualifies when used to heat a home with corn.
Homeowners who purchase and install a qualifying Classic Edge HDX or M255 PE model can get the tax credit simply by filling out a form declaring the amount you spent when you file your federal income taxes. As long as your system is installed in the year you file for the tax credit, you can claim the 26% from your federal income taxes.
Does it matter how I pay for my Furnace?
Installation Date: To be eligible for the federal tax credit, install a qualifying Central Boiler outdoor furnace between January 1, 2021 and December 31, 2023. The furnace must be claimed on the tax return year in which the installation is complete.
Qualifying Outdoor Furnace Criteria: The outdoor furnace must be at least 75% efficient per the higher heating value (HHV) of the fuel. The Classic Edge 360, 560 and 760 all meet this requirement. The Maxim M255 PE qualifies when used to heat a home with corn.
Residency Requirements: The tax credit for energy efficiency is available for investments made that qualify for the credit for residential heating.
It doesn’t matter if you pay for the furnace and installation up front or finance your purchase. Central Financing is available at participating dealers with very attractive financing options for the furnace and installation. Either way, you’re eligible for the tax credit.
How do I claim the Biomass Tax Credit?
A tax credit is a dollar-for-dollar reduction of the federal income tax you owe. So in order to qualify for the federal tax credit, you need to owe taxes to benefit. The Biomass Stove Tax Credit is a non-refundable personal tax credit which means it can only reduce or eliminate your liability (how much money you owe to the IRS).
Fortunately, the Biomass Stove Tax Credit allows homeowners to apply their tax credit over multiple years. If your tax burden in 2021 is less than the full amount of your credit, you can carry over the remainder when filing your taxes in 2022.
What paperwork should I keep for my tax record?
You can claim this credit on your 2021-2022 tax return. The credit decreases your tax liability. (It does this by increasing your refund or, if you owe taxes, it decreases the amount you have to pay). After you’ve had your qualifying Central Boiler outdoor furnace installed, simply fill out an additional form when it’s time to file your federal income taxes. The form you’ll need to fill out for the IRS is 5695. If you have questions or need help completing the form, contact your tax professional.
What expenses are eligible for the Federal Biomass Stove Tax Credit?
Keep your purchase receipt(s), including the cost of the furnace and installation. You should also have a copy of the 2021-2023 Manufacturer’s Certification Statement stating the the outdoor furnace qualifies for the credit and is at least 75% efficient (HHV). You can download the statement at CentralBoiler.com. You don’t need to send these with your tax return.
Both purchase and installation costs (e.g., piping and related materials, onsite labor) can be included in your total cost.
This summary information is provided as a convenience and may not be relied upon as a substitute for professional tax advice. Central Boiler, Inc. is not a tax advisor. Taxpayers claiming a tax credit should consult a tax professional with any questions. Central Boiler is not responsible or liable for the taxpayer's ability to receive tax credits.