For 2006 through 2010, the tax credit for each under-age-17 dependent child, stepchild, foster child, or grandchild is $1,000. The credit is subject to phase-out beginning at adjusted gross income of $110,000 for joint filers, or $75,000 for unmarried individuals.
DEPENDENT CARE CREDIT
A tax credit is allowed for a portion of dependent care expenses paid for the purpose of allowing the taxpayer to be gainfully employed. The maximum amount to be claimed is $3,000 for on qualifying child or $6,000 for two or more qualifying children. The credit is equal to 35% of employment related expenses for taxpayers with adjusted gross income of $15,000 or less. For taxpayers with adjusted gross income over $15,000, the credit is reduced by one percent for each $2,000 of adjusted gross income over $15,000. For taxpayers with an AGI over $43,000, the credit is 20%.
There are two education-related credits: the “Hope Scholarship Credit” and the “Lifetime Learning Credit.”
The Hope Scholarship Credit provides a maximum allowable credit of $1,650 per student for each of the first two years of post-secondary education. The Lifetime Learning Credit allows a credit of 20 percent of qualified tuition expenses paid by the taxpayer and is available for the first $10,000 of tuition.
Qualified tuition and related expenses does not include room and board, books, student health fees, or transportation.
The credit begins to phase out for single taxpayers when modified AGI reaches $45,000 and is completely phased out at $55,000. For joint filers the phase out range is $90,000 to $110,000.
ELECTRIC AND CLEAN-FUEL VEHICLES
For 2006, the list of vehicles that are qualified hybrid vehicles for the Alternative Motor Vehicle Credit has been expanded. The tax credit for hybrid vehicles applies for vehicles purchased on or after January 1, 2006, and could be as much as $ 3,400 for those who purchased the most fuel-efficient vehicles.
For more specific information on deduction for electric vehicles click here
ELECTRIC AND CLEAN-FUEL VEHICLES
The clean-fuel vehicle and refueling property deduction expired for vehicles placed in service in 2006. The qualified electric vehicle credit is reduced by 75% for vehicles placed in service in 2006, and no credit will be allowed after 2006.
ALTERNATIVE MOTOR VEHICLE CREDIT
You may be able to claim this credit if you place an alternative motor vehicle in service for business or personal use after 2005. An alternative motor vehicle must meet certain requirements and be a new:
- Advanced lean burn technology vehicle
- Qualified alternative fuel vehicle
- Qualified fuel cell vehicle, or
- Qualified hybrid vehicle
ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY CREDIT
You may claim this credit if you place qualified alternative fuel vehicle refueling property in service for business or personal use after 2005. This includes certain property used to store or dispense a clean-burning fuel or recharge motor vehicles propelled by electricity.
RESIDENTIAL ENERGY CREDITS
You may be eligible for two new credits, the nonbusiness energy property credit and the residential energy efficient property credit, for making energy saving improvements to your home in 2006. For credit purposes, costs are treated as being paid when the original installation of the item is completed, or in the case of costs connected with the construction or reconstruction of a building, when your original use of the constructed or reconstructed building begins. If less than 80% of the use of an item is for nonbusiness purposes, only that portion of the costs that are allocable to the nonbusiness use can be used to determine the credit. A home includes a house, houseboat, mobile home, cooperative apartment, condominium, and certain manufactured homes. You must reduce the basis of your home by the amount of credit allowed.
NONBUSINESS ENERGY PROPERTY CREDIT
You may be able to take a credit equal to the sum of:
- 10% of the amount paid in 2006 for qualified energy efficiency improvements installed during 2006, and
- Any residential energy property costs paid in 2006. However, this credit is limited as follows:
- A total accumulated credit limit of $500 for all tax years
- An accumulated credit limit of $200 for windows for all tax years.
- A credit limit for residential energy property costs for all tax years of $50 for any advanced main air circulating fan; $150 for any qualified natural gas, propane, or oil furnace or hat water boiler; and $300 for any item of energy efficient building property.
QUALIFIED ENERGY EFFICIENCY IMPROVEMENTS
Qualified energy efficiency improvements are the following items installed on or in your main home located in the United States if these items are new and can be expected to remain in use for at least 5 years.
- Any insulation material or system which is specifically or primarily designed to reduce the heat loss or gain of a home when installed in or on such home.
- Exterior windows (including skylights).
- Exterior doors
- Any metal roof installed on a home, but only if this roof has appropriate pigmented coatings which are specifically and primarily designed to reduce the heat gain of the home.
RESIDENTIAL ENERGY PROPERTY COSTS
Residential energy property costs are costs of new qualified energy property that is installed on or in connection with your main home located in the United States. This includes labor costs properly allocable to the onsite preparation, assembly, or original installation of the property. Qualified energy property is any of the following.
- Certain electric heat pump water heaters, electric heat pumps, geothermal heat pumps, central air conditioners, and natural gas, propane, or oil water heaters.
- Qualified natural gas, propane, or oil furnaces or hot water boilers.
- Certain advanced main air circulating fans used in natural gas, propane, or oil furnaces.
RESIDENTIAL ENERGY EFFICIENT PROPERTY CREDIT
You may be able to take a credit of 30% of your costs of qualified photovoltaic property, solar water heating property, and fuel cell property. This includes labor costs properly allocable to the onsite preparation, assembly, or original installation of the property and for piping or wiring to interconnect such property to the home. This credit is limited to:
- $2,000 for qualified photovoltaic property costs
- $2,000 for qualified solar water heating property costs, and
- $500 for each half kilowatt of capacity of qualified fuel cell property for which qualified fuel cell property costs are paid.
QUALIFIED PHOTOVOLTAIN PROPERTY COSTS
Qualified photovoltaic property costs are costs for property that uses solar energy to generate electricity for use in a home located in the United States and used as a home. This includes costs relating to a solar panel or other property installed as a roof or a portion of a roof.
QUALIFIED FUEL CELL PROPERTY COSTS
Qualified fuel cell property costs are costs for qualified fuel cell property installed on or in connection with your main home located in the United States. Qualified fuel cell property is an integrated system comprised of a fuel cell stack assembly and associated balance of plant components that converts a fuel into electricity using electrochemical means. To qualify for the credit, the fuel cell property must have a nameplate capacity of at least one-half kilowatt of electricity using an electrochemical process and an electricity-only generation efficiency greater than 30%.