The Tax Attic with Jerry Coon – September 17, 2009

Jerry Coon, Enrolled Agent

Jerry Coon, Enrolled Agent

Michigan Residential Energy Credit to have positive effect

I don’t consider myself a superstitious person. I don’t really believe in omens. However, I do pay attention to events as they occur, draw conclusions from those events, and base my actions on those conclusions. For example, over the Labor Day weekend, Deb and I camped along with her brother, Don’s family, at Muskegon State Park. What a wonderful weekend and a nice facility.

Don and I salmon fish. The park has an excellent place to moor the boat near the channel. It took about 20 minutes from the time we left the trailers to the time we dropped a line in the water. We caught some fish over the weekend.

Don and Renae left Monday, but Deb and I stayed over to Tuesday, so I planned to troll carefully up and down the channel Tuesday morning for an hour or two before loading up the boat and heading home.

About 6:30 a.m., I went down to the beach to wade the 100 feet or so out to the boat. As I approached the beach, I was surprised to see the boat sitting within a few feet of the shore—not good. My mooring set-up had broken loose. It’s a good thing I had thrown an anchor out to help stabilize the rear end. That anchor kept the boat from totally washing up on the shore, and that would have been a disaster. This is one of those times when you analyze the situation and decide whether it’s a good omen or a bad omen. I was either being given the red carpet treatment—I didn’t even have to get my feet wet to jump into the boat and the fishing was probably going to be fantastic—or the mooring breaking loose was telling me that I shouldn’t go out fishing by myself because some further bad thing was going to happen.

Not wanting to tempt fate, I chose to not go fishing. I sat in the boat, drank my coffee, watched a beautiful sunrise, and saw a few people in the channel catch fish. About 8 a.m., I walked back to the trailer and told Deb the story. She wasn’t all that sure about me going fishing by myself anyway, so I don’t think it bothered her much that I was fishless. There is always another day and I bet the fish will still be biting.

Last week, I began to discuss the tax provisions taking effect this year that will have a positive effect on returns to be filed this coming tax season. I will continue that discussion this week.

Michigan, for the first time, has enacted a Michigan Residential Energy Credit. The credit is based on purchases of the following items:

1. insulation

2. furnaces

3. water heaters

4. windows

5. refrigerators, clothes washers, and dishwashers

Note that this list is very specific and does not include many items, such as hybrid automobiles, wind or solar power generators, boilers, or doors that do qualify for the federal residential energy credit. As we all know, Michigan writes their own rules, and this is another example.

The credit is 10% of the purchase price, including installation, up to $75 on a single return and $150 on a joint return. The purchases must be made between Jan. 1, 2009 and

Dec. 31, 2011, and must meet or exceed the EPA Energy Star criteria. The purchases must be made for a home that qualifies for the principal residence exemption, so, in general, purchases for second homes, cottages, boats or motor homes will not qualify. This also means that renters will not qualify for this credit. Single taxpayers with an Adjusted Gross Income (AGI) in excess of $37,500 will not qualify nor will joint filers with an AGI in excess of $75,000. The credit is fully refundable and each category qualifies for the $75 single or $150 joint credit. A single taxpayer could qualify for a maximum credit of $375 if a purchase was made from each category, and joint filers could qualify for a maximum credit of $750.

I think it’s fair to say the legislators wanted to get some publicity for giving credit on the purchase of some energy-related items, but it’s also fair to say Michigan is over two billion dollars under water. Perhaps they should have analyzed the economic events of the past few years a little more carefully and chose not to go fishing in the credit area. After all, that two-billion-dollar-plus deficit is growing daily, and this credit is going to add some dollars to that amount. This is Jerry Coon signing off. 

Jerry Coon is an Enrolled Agent. He owns
Action Tax Service on Northland Drive in Rockford.
His telephone number is (616) 866-4704.
His e-mail address is

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