Going green does great good to your lifestyle. It has a positive effect on your taxes too. Here are some federal tax credits that ease your tax burden as well as help the environment:
In order to qualify for a credit, the vehicle or equipment must meet certain energy-related requirements such as the manufacturer’s certification that the requirements are met, and the purchase qualifies for a tax credit.
The Residential Energy Efficient Property Credit helps defray up to 26% of the cost of adding alternative energy systems to your home, and the labor to install the same for systems placed in service in 2020, 2021, or 2022.
For 2019, one can claim 30% of the amount spent buying and installing a geothermal heat pump system on his or her tax return. In 2020, that drops to 26%. In 2021, it goes down to 22% and is not scheduled to be available for systems placed in service after 2023.
There is no dollar limit on the credit with the exception of fuel cell property, limited to $500 for each ½ KW of capacity.
Tax credits for most hybrid cars have expired, but the amount of the credit differs according to the make, model, and year the car was made, and there are other requirements you need to be aware of. This credit can be claimed if:
- The vehicle was purchased before 2017
- The vehicle’s original owner/lessor had applied for the credit and
- The car is driven primarily in the U.S.
If the vehicle was purchased in order to resell, the credit cannot be claimed.
The purchase of a plug-in electric vehicle could be eligible for the Qualified Plug-In Electric Drive Motor Vehicle Credit, which applies to new electric vehicles bought after Dec. 31, 2009. This credit will begin to phase out when at least 200,000 qualifying vehicles manufactured by each automaker have been sold in the United States. In order to qualify the vehicle must:
- Have been purchased new
- Have been manufactured by an eligible company
- Have a minimum of 4 wheels
- Be capable of being driven around on open streets & highways
- Have a weight rating of fewer than 14,000 pounds
- Possess an electric motor that uses a rechargeable battery to generate at least 5 kW hours of capacity
Tax credits for both of these range from $2,500 to $7,500 based on the vehicle’s battery capacity and the car’s overall size.
Any donation of electronics such as cell phones, computers, and game consoles to a qualifying non-profit or company can be written off for the amount of their fair market value.
If the donation is valued at less than $500, no forms need to be filled out. For donations in excess of $500, Form 8283 is to be submitted, listing the names of organizations and types of donations made, along with the tax return.
Even products that no longer provide tax credits can save money by instantly lowering energy bills.
Please feel free to reach out to GKM’s tax professionals for any investment advice at https://www.gkmtax.com and [email protected].
