Q: **Update** How does the Advanced Main Circulating Fan credit work?

A: The stimulus bill expanded the tax credit for advanced main circulating fans from a straight $50 credit for any furnace equipped with such a fan to 30% up to $1,500 for advanced main circulating fans that account for less than 2% of the furnace's total annual energy used (based on standard Department of Energy test procedures). There remains uncertainty how the credit can be claimed on an advanced fan installed as part of a non-qualifying furnace (less than 95% AFUE). HARDI just received indication from the IRS that they are currently intending to interpret this credit to mean that any advanced fan-equipped furnace that has less than a 95% AFUE can only qualify the costs specific to the advanced fan, not the entire furnace, for the tax credit. Equipment manufacturers are currently pursuing and expedited official IRS clarification that will hopefully provide concrete certainty soon, but the latest indication is that only the costs specific to the advanced fan will qualify for the tax credit on furnaces less than 95% AFUE. HARDI advises that members refer to their tax professionals before recommending to customers what will and will not qualify for this tax credit.

**Update on Non-Refundable Tax Credits

As an update to this earlier post regarding these "non-refundable HVAC tax credits", here is a boiled down recommendation on how contractors should explain these tax credits to homeowners:

The HVAC tax credits are non-refundable tax credits which means that they can only be claimed if the taxpayer owes as much or more in taxes than the tax credits they are filing for. This can vary tremendously from taxpayer to taxpayer due to personal or household deductions, other credits, and the Alternative Minimum Tax so homeowners need to check with their tax advisor to determine whether they will most likely be able to qualify for a $1,500 tax credit.