David Peters, financial advisor and CPA, joined Cheddar News to discuss how families can save money from the Inflation Reduction Act when filing taxes this season.

Closing Bell

How Families Can Save Money This Tax Season

New tax credits and the inflation reduction act becoming available to american households starting january one and now consumers are eligible for thousands of dollars worth of credits while making their homes more energy efficient tackling climate change. Joining me now is David Peters, an accountant and financial advisor. David, I think you've been reading in on this. What are some of the best ways for consumers to make the most of this opportunity? Well, there's a lot of good tax credits that are available. Um, and you know, while there's maybe not much that we can do about this return that we're getting ready to file sometime before April 18th. Um, we can certainly do something going forward. There's credits that are available for improvements to your home, energy efficient improvements to exterior doors, exterior windows. And also, if you're in the market for an electric car, there's some tax credits that you can take advantage of there as well. Let's talk about the electric vehicle tax credits. This has been a big story of course, with some fluctuation and price movements for some of these key vehicles just in the past week or so, David, Since that rule actually changed on friday, what can consumers expect when it comes to electric vehicles. So there's two different versions of the credit now and the if you buy a new electric car, then the credit is up to $7500. And and when I say a credit, I mean a dollar for dollar reduction in your tax liability. So in other words, if you owed $10,000 in taxes and you were to take a 75 $100 credit, you would only owe 2500. So it truly is dollar for dollar savings when we're talking about that. So it's up to $7500 for a new electric car. If it's a used electric car then it's only a $4000 credit. The one that the piece that you need to watch out for though with both of those is that uh there are some some price uh issues that you need to watch out for. So for example on the new vehicle credit, the credit is only available if the car is has an M. S. R. P. Of $55,000 or less with the with the used vehicle credit, It's 25,000 just like we just saw up on the screen. So so we gotta watch out for that stuff. Okay. Very important there. What about those home, energy efficient updates? What kind of updates in that department will classify as some tax credits? Well, if you were to install energy efficient doors that would net you and up to $500 credit. If you install energy efficient windows that can be up to a $600 credit. Um and then there's some other updates that you Make for energy efficiency in the home. And those are going to be generally eligible for an up to $1,200 per year credit. So we've had credits available for home improvements before for energy efficiency, but making it so That it's up to $1,200 per year. That's actually a pretty big increase before it was a $500 lifetime credit. Now $1200 per per year, that's a whole lot more lucrative and a real chance for a lot of people to save money. And so let's just clarify too. Can any of these items be written off or do they apply for credits here in this tax filing season that's currently underway? Or do Americans have to wait until next year when they actually file their taxes for 2023. Most of these credits, the expanded version of the credit, like we're talking about today, those are gonna be available for next filing season. So they're gonna be applicable for 2023. In some cases, we had older versions of the credit, for example, with the previous clean vehicle credits for cars, those are gonna be at the lesser amounts. All right, I'm gonna jump in here. We're tight on time. David Peters, an accountant, financial advisor. David. Thank you for those tips and insight