Claiming New Windows on Your Taxes

A tax credit that went away in 2016 was given a brief second chance at life in February 2018. That’s when the Bipartisan Budget Act of 2018 gave taxpayers an additional year to claim certain tax credits for residential energy-efficient additions to their home. One of these tax credits is for the installation or replacement of windows. But before windows can qualify for a tax credit, they must meet IRS qualifying standards, which are outlined in the federal Energy Star® program. And they even have to fulfill the definition of “window.”

For a window to qualify as an allowable tax credit, its primary purpose must be to provide daylight and/or ventilation. Its construction must consist of a frame-and-sash component that holds one or more pieces of glazing. This includes skylights that also have the primary purpose of providing daylight and/or ventilation. Skylights can be sloped or horizontal along the roof. Even though the Energy Star® guidelines also include transoms, the IRS notes that qualifying windows and skylights must be located on the exterior of a house. The cost of the windows is deductible, but the cost of installation is not allowed.

Only windows in your primary residence qualify for the tax credit. Businesses and investment homes do not qualify.

The IRS defines qualifying windows as those that meet or exceed the requirements in version 6.0 of the Energy Star® program. This tax credit also includes energy-efficient upgrades other than windows, such as insulation, high-efficiency waters and certain heating and air-conditioning systems. You can only claim 10 percent of the cost of qualifying windows, with a maximum allowable credit of $200. This $200 also represents a lifetime cap (during the years of 2006 through 2017) for windows, which is included in a lifetime cap for all allowable energy tax credits of $500. For example, this means if you've already claimed $500 for energy tax credits on your tax returns during the tax years of 2006 through 2016, you cannot claim any additional amount for windows that you may have added in 2017.

Although this federal tax-credit extension ended on Dec. 31, 2017, you can still claim your energy tax credits by filing IRS Form 1040X (Amended U.S. Individual Tax Return). You cannot file this form electronically, but you can download it from IRS.gov/forms, and mail it to the address that's listed in the instructions. You'll have three years from the date you filed your original tax return to file an amended return and claim your energy tax credit for new windows.