For most of us, tax season sneaks up and throws a real wrench in our gears. As much as you try to prepare and put money aside, it always feels like there’s more to do. Hanging on to receipts,tracking possible deductions, getting all your papers in order and taking care of business before April 15 is a tremendous amount of work and it’s almost too much to bear.
While filing taxes may never become an enjoyable pastime, you can get ahead of the curve if you make smart choices through the course of the year. Beyond saving money and tracking expenses,taking advantage of incentivized programs can go a long way in helping your situation. Some benefits are only afforded to certain industries, but renewable energy investments are something almost anyone can cash in on.
You’ve probably heard about some of the green energy tax credits, but there’s a good chance you don’t know about all of them. Here are six you should keep on your radar and use if the opportunity arises.
This was one of the earliest, and therefore most familiar, green energy incentives. Amenities like solar panels and efficient water heaters can reduce your tax payments significantly, and if you were under the impression that the solar tax credit expired in 2016, you’re looking at dated material. Through the end of 2019, residential solar installations come with a 30 percent credit. That number starts to drop in 2020, but you still have a couple years to get your panels installed.
Now, putting solar panels on your house costs a pretty penny. Each project differs from the next, but most people end up paying between $25,000 and $35,000. That certainly isn’t chump change, but it makes the 30 percent tax credit that much more impressive. If you’d rather send your money to a local energy company than the IRS, this purchase will definitely help you accomplish that. Most energy providers also claim that the savings you get from solar panels will cover the installation cost in 10-12 years.
It’s important to note that solar panels aren’t the only energy upgrade that comes with a tax credit. There are a few other fixtures worth checking out, including:
● Solar water heaters
● Wind energy property
● Geothermal heat pumps
Most of us don’t have the time or space to install a wind farm, but these energy options are very much available for people in a position to take advantage of them. The more property you own, the more choices you have for clean energy, and the more you can benefit from that production. As it becomes increasingly realistic for everyday people to access these types of power supplies, more residential property owners are able to cash in on green energy tax credits while cutting back on their utility bills.
Small business owners struggle with the IRS as much as anyone. If you run your own company, it’s essential you make use of incentives that allow you to turn business spending into savings. Green energy tax credits are a great place to start.
Business owners have access to the same renewable energy credits that residential property owners use, so solar panels and fuel cells are good options. Beyond that, companies can take additional environmentally-conscious steps to reduce the money paid at tax time.
While section 179D - which allowed businesses to lower their taxes by simply lowering their energy costs - is technically expired, lawmakers are trying to revive some of the tax breaks going to those who make their offices “green.” To qualify for this incentive in the past,energy upgrades had to reduce your utilities by 50 percent or more. There are a number of ways to hit this mark, such as installing efficient light bulbs and making sure the doors, windows, siding and flooring are all energy efficient.Under the old law, certified green buildings got a tax break of $1.80 per square foot; where that number goes in the future is anyone’s guess.
Fortunately, not all incentives are in limbo,as buying efficient appliances still comes with a tax reductions and rebates.If you get a qualified HVAC system, you can get a $300 credit. The same goes for other temperature control systems that meet the right standards. Remember,these upgrades provide more than just green energy tax credits; you save money on your utility bills well after the IRS reimbursement has come and gone. You also stand to drive up the value of a property when you upgrade the energy fixtures.
For those who aren’t in a position to upgrade business equipment, there are still ways to chip away at your taxes. Some nonprofits and nonprofit partners are able to claim expenses when helping other businesses and community centers improve energy efficiency. You can also put money toward another company’s green energy venture and then claim that donation.
Whatever your company does, green energy tax credits are out there for the taking. Even if you can’t make use of the more common deductions, you can still find ways to save yourself and your company some money.
Deductions for charitable giving are awesome.We should all be looking for ways to give to those less fortunate than ourselves, and the tax write off is just the cherry on top. And while there are all sorts of donations available for people to use as deductions, giving old electronics to charitable organizations is one of the top options.
Think about the devices you have to upgrade with annoying frequency:
● Electronic toys
For the sake of our children and our planet,we don’t want these things piling into landfills as they become outdated.That’s why the recycling incentive exists, and why we’d all be crazy not to take advantage of it.
Once your phone starts dropping calls and running out of storage space, you’re not going to try and sell it to a friend or family member, right? You’re done with it and you don’t need to save it for later. Taking that item to a Sustainable Materials Management (SMM) partner allows you to deal with the item safely, and you can write yourself a receipt for fair market value.
If you donate old electronics, you’ll see your qualified charitable deduction go up much more quickly than if you’re just bringing old shirts and shoes to the local thrift store. Best of all, you can feel confident that your donation is making a difference when you go to an SMM center. Even if you’re turning in a completely defunct laptop, the materials making up the processor and the battery have value to manufacturing companies.Just like with all forms of recycling, items that seem like garbage to you may still have a lot of value to a company that knows how to repurpose them.
Before you give an old gaming system to a kid that might not want it, consider donating the product to a certified company than can make use of the materials. You stand to benefit more on your taxes by doing so, and it’s less likely that product will end up in the dump.
The numbers are always subject to change on these matters, but as of this writing you can still get a $7,500 tax credi twhen you buy a qualified electric car. The amount you’re able to claim is reliant on the number of vehicles sold by the manufacturer, so you need to ask some questions before making your purchase to ensure you’ll still get a decent credit.
Incentives for buying hybrid vehicles was one of the stronger green energy tax credits for consumers during our recession recovery, and it clearly had an impact on car sales. If you’re already in the market for a new car, it’s at least worth looking at electric options and deciding if such a car would fit your lifestyle. Some people struggle to make use of a vehicle that has to charge every day, while others end up saving tons of money on gas and cashing in on a nice tax rebate.
$7,500 is the maximum deduction, and it’s possible you’ll get a much smaller amount. Each individual credit depends on the size of your car’s battery (weird, right?), so certain vehicles won’t get you as much money as others.
Again, future tax codes are always subject to change, so I apologize if this deduction no longer exists by the time you read this. For now, consider fuel-efficient vehicles a smart purchase if you’re looking for an energy-based tax credit.
Just as the electric vehicle deduction is aimed to get gas-guzzlers off the road, commuters can earn tax credits by changing the way they get to work.
If you take a train or bus to work and buy a monthly pass, you can take a pre-tax deduction of $255 per month. All things considered, that’s a pretty sweet incentive for not sitting behind the wheel during rush hour. In order to get a pre-tax credit like this, you need to establish an agreement with your employer. Once everything is arranged, you’ll be able to claim the $255 against your taxable wages for each qualifying month.
In some cases, employers can arrange a similar agreement with their employees, but this one pertains to riding a bicycle.Instead of getting a pre-tax deduction to cover commuter costs, your employer instead offers a tax-free contribution for a qualified bicycling month.Essentially, if you ride your bike to work more often than not, you might get a little tax-free padding on your paycheck. Employers use these programs to reduce the cost of employee parking, and the local governments offer the incentives as another means of limiting the number of cars on the road.
Neither of these deductions comes close to the money you get from other green energy tax credits, but they’re both concrete ways to save a few dollars. In addition to the tax savings, you’ll spend lesson gas, parking and vehicle upkeep. If you’re searching for ways to cut costs,check with your employer to see if you can cash in on either of these options.
Keeping up with federal deductions and credits isn’t always easy, and it isn’t the only way to save. At the local level, there are lots of ways you can reduce your taxes via green energy tax credits. Sometimes the rebates depend on the company providing your energy, and in other cases your city or state might offer a credit that applies to a specific type of equipment.
Local benefits are particularly important when it comes to these programs, as different regions have different energy issues. Living in Texas, I might not know the best write offs for a business owner in Minnesota. If you live in the desert of California next to a bunch of wind turbines, you have a different source of energy than someone living by the swamps of Louisiana. There are federal programs that all Americans can access, but local incentives might get you the most bang for your buck.
For an example, many cities offer additional credits and cheaper building permits for people installing solar power. When your solar panels are plugged into the grid, your city is able to make use of the extra power generated by your home. This cuts costs for everyone involved, and local administrators push for these kinds of programs.
The local rebates are often handled by energy companies, while the state incentives may come on your tax return. If you don’t know what’s available in your area, a quick Google search with your city, state and the words “green energy tax credit” should deliver the information you need.
As you start prepping for tax time and thinking about ways that going green can save you money, remember to note the difference between a tax credit and a tax deduction. Lots of expenses are deductible, but you don’t get even money for those on your return. With a credit, that’s a set amount that you can use against the amount you owe.
Depending on how you look at it, these tax incentives are kind of like free money. You may have to spend in order to get anything back, but the energy landscape is in the midst of a big overhaul. Before long, renewable energy could be the rule instead of the exception, and getting a head start might put you in a position to save even more money down the road.
Whether you’re a homeowner or someone who commutes to work, there are green energy tax credits you should look into. You might not be able to capitalize on these options right away, but you should keep them in mind as your living and work situation changes. As soon as you’re ready, you can start saving money on utilities while getting a little something back from Uncle Sam.