The water heater is 50Gal Ruud Guardian Pacemaker.
Both are sitting on a raised wood platform in the garage side by side.
The furnace has cold air return from the top (duct is in attic and return opening is at a hallway). The hot air is blown down into ductwork in the crawl space then to many registers. The furnace has other two ducts: one is obviously the flue as it is hot. This and the flue from water heater go to a Y and a thicker one goes through the roof to outside. There is another relatively large round pipe (about 8") branches from the cold air return just above the furnace. This one goes through the wall to outside. There are some wires going out of the pipe at one place and connect to a box of electronics attached to the wall. I could read some wording on it look like "fresh air damp.." so I guess the furnace will draw fresh air through this duct from outside for its combustion oxygen need. It will not use the air in the garage. But how about the water heater? It doesn't have such duct (just the flue). Do I need keep garage window open a crack to supply air for it?
By the way, do these Payne and Ruud have a good reputation?