I'm sure that everyone has several hundred dollars laying around during the holiday season. :::guffaw::: It might benefit you to consider spending a little of it on a home improvement that increases the energy efficiency of your home. Why? Because good ol' Uncle Sam is providing a tax credit (even better than a tax deduction because it directly reduces your bottom line tax liability) for things like energy efficient hot water heaters, windows, heaters, and other specific etc.
Of course, the IRS has issued limitations: you can only deduct a certain percentage of windows, the credit itself has a dollar limit (something like $500 total), and--I think--everything must replace existing stuff (no "new construction") AND meet certain energy standards. No "new construction" items? Bummer. I could have maxed out the credit on our building project!
I'm going to receive a $300 tax credit for my new hot water heater. However, the cheapies didn't meet the energy requirements. It's actually a "wash," except for the fact that my new water heater manufacturer claims that the part of my gas bill devoted to heating hot water (the second largest gas-sucker behind natural gas central heat) will be reduced by 50%. I'll believe it when I see it.
Disclaimers seem to be all the rage, so I'll put mine here. I'm no tax accountant. I know just enough to be dangerous, which is, well...dangerous. So, don't take my word for it. Check out the IRS information at
http://www.irs.gov/newsroom/article/0,,id=154657,00.html
and at
http://www.irs.gov/pub/irs-drop/n-06-26.pdf
Hurry, though. You have to make your purchases before January 1, 2008.
ONE MORE THING: If you've already done some of the aforementioned improvements, AND paid for them after December 31, 2005 you could have received this same credit in previous years. Ask your tax preparer.
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