If you replaced your home’s drafty old windows and skylights with more energy-efficient products in 2010, you may be eligible for up to $2500 in federal tax credits on your 2010 taxes. Then again, if these new energy-efficient windows were not actually installed in 2010, they won't be eligible--and you'll have to try for the lesser 2011 federal tax credits--a maximum of $200--instead.

What is covered by these credits? An exterior window or skylight that is EnergyStar® labeled or meets or exceeds the prescriptive criteria established by the IECC (International Energy Conservation Code) for the climate zone in which it is installed. To qualify, it must be installed in your principal residence—that is, the home where you live most of the time. That home may be a house, mobile home, manufactured home, co-op, condo, or even a houseboat. Windows and skylights may either replace older models or be installed in new locations, such as a home addition.

Amount of the 2010 federal tax credit: 30% of the material cost, up to $1,500; installation costs are not included. Amount of the 2011 tax credit: 10% of the material cost, up to $200. Again, installation costs are not included.

Note that the product(s) must be placed into service between January 1, 2009, and December 31, 2010, for the 2010 credits or by December 31, 2011, for the 2011 credits. Windows and skylights placed in service between June 1, 2009, and December 31, 2010, must have a U-factor and Solar Heat Gain Coefficient (SHGC) less than or equal to 0.30. A Manufacturer’s Certification (a statement from the manufacturer certifying that the product qualifies for the tax credit), which is often available from the manufacturer’s Web site, should be kept in your records along with your receipt. When filing your federal tax return, submit IRS Tax Form 5695.