Eco-Friendly Tax Savingstax breaks | November 21, 2016 | By Susannah McQuitty
It’s not rocket science: You want to be conscious of your energy consumption, but it wouldn’t hurt to get a break or two for your efforts, right? Especially since taxes are meant to contribute to our society, if you’re being a responsible citizen, there’s no reason you shouldn’t get a break.
As with most tax credits, eco-friendly credits vary from state to state, but a few things are pretty universal.
Energy-efficient home improvements
The Residential Energy Credit gives you up to 30 percent back on the cost of making qualifying energy-efficient improvements to your home. The credit is for certain equipment that uses alternative energy, such as solar water heaters and solar electric panels. It also provides money back on energy-efficient upgrades, like windows and doors.
To claim the credit, just fill out our Form 5695 screen in your 1040.com tax return.
Electronics as charitable donations
Being eco-friendly goes past the energy we use – what we do with our old mobile devices is an effective step in reducing our carbon footprint.
Though donating old electronics won’t get you a tax break for your good stewardship of resources, it will get you a tax credit for donating to a qualified charity. Electronic donations are only worth their current value – you won’t be able to turn in that old iPhone 4 and expect it to be worth $600 – but chances are you’ll be able to get some amount of charitable deductions for your trouble.
One thing to remember: There is a real danger of private data being accessed on old devices. If you plan on donating your phone but you don’t know how to wipe it, confirm with your donation recipients that they will clean old data.
Electric and hybrid vehicles
Good news if you drive an electric or hybrid car! There is a federal tax credit worth up to $7,500 if you bought your vehicle in or after 2010 – though it does vary according to battery capacity per car. Just keep in mind that the credit begins to phase out after 200,000 qualifying vehicles have been sold in the United States.
So how do you find out the number of vehicles that have been sold and whether yours qualifies? Vehicle manufacturers can certify that a vehicle meets the requirement for the credit, and you can find the complete list of makes, models, and how much the credit is worth per model on the IRS website.
Eco-friendly deductions per state
If you want to do even more to take care of our planet and resources, we can point you in the right direction.
DSIRE is the most comprehensive source of information on incentives and policies that support renewable energy and energy efficiency in the United States. And hey – they’re based in North Carolina, just like 1040.com! Shameless neighbor plug. If you want to learn more about your state’s eco-friendly credits and deductions, check out the DSIRE website.