Going Green Means Seeing Green: How to Save on Taxes
Buying and living eco-friendly isn’t simply a trend – it’s also economical and beneficial come tax season. Perhaps you’re wondering if these are worthy choices to cut down your tax bill. It’s true that many of the tax credits and deductions expired around 2011, but combine what’s left and you’ll save yourself some green – oh, and Mother nature, too. Read below to decide which eco-friendly actions will benefit you next April.
Renewable Energy/Energy Star
The renewable energy credit will remain through 2016, which covers 30% of the cost of a new renewable energy system, with no limit. There’s one catch – it only applies to owned homes.
If you invest in a residential fuel cell and microturbine system, a tax credit for 30% of the cost (up to $500 per 0.5 kilowatt of power) also runs through the year. This applies to any primary residence.
The Energy Star program was enacted by the U.S. Environmental Protection Agency and the U.S. Department of Energy to help taxpayers save money and the environment. Some Energy Star tax breaks expired years ago, and not all products are eligible, but there are still credits available for some energy programs. Even though some tax credits have come and gone, Energy Star products can save you money by lowering your energy bills.
If you have an all-electric vehicle, or are considering purchasing one, it likely qualifies for a tax credit. Check the DOE’s Fuel Economy website to search for your make and model. Tax credits can be anywhere from $2,500 to $7,400, based on your car’s battery.
Many taxpayers donate for the satisfaction of goodwill, but you can also extend this to recycling your old phone or laptop. This tax benefit is available to those working directly with a nonprofit, or a business that partners with nonprofits. As a donor, you can assign a fair market value to each item donated based on what it currently sells for. You can use a third party to calculate the tax benefit based on IRS guidelines. If your donation is valued at less than $500, you don’t have to fill out a form, but once it exceeds that, you will have to submit Form 8283 with your tax return.
2011 is in the past, but eco-friendly tax breaks aren’t over – consider purchasing an electric vehicle, upgrading your home energy system, or simply recycling your old iPhone. Every incremental amount can obliterate your tax bill and soar you into the green with a tax refund.