2011’s Federal Energy Tax Credits of up to $500 for various home improvements are not as generous as they were in 2009 and 2010. But if you upgraded one or more of the following systems in 2011, you may be eligible to take a tax credit on your 2011 returns.

• Insulation
• New Windows
• Roofs
• Water Heaters

The energy tax credits are small, but at least a credit is better than a deduction:

• Deductions just reduce your taxable income.

• With a credit, you get a dollar-for-dollar reduction in your tax liability: If you get the $500 credit, you pay $500 less in taxes.

How to claim the 2011 energy tax credit

• Determine if the system you installed is eligible for the credits. Go to Energy Star’s website for detailed descriptions of what’s covered; then talk to your vendor.

• Save system receipts and manufacturer certifications. You’ll need them if the IRS asks for proof.

• File IRS Form 5695 with the rest of your tax forms in 2012.

This article provides general information about tax laws and consequences, but isn’t intended to be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice