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Going green has tax benefits that could potentially reduce your total tax bill when filing your taxes. More taxpayers are taking advantage of these tax incentives by buying alternative vehicles, using Energy Star products or installing energy equipment in their home. Here are the top green tax credits you should be claiming.
- Clean energy vehicle savings
Although tax credits for most hybrid vehicles have expired, there are still ways that taxpayers can take advantage of having an alternative vehicle.
There are certain vehicles that could qualify under the Alternative Motor Vehicle Tax Credit. The amount of the credits vary based on the make, model and year of the vehicle that a taxpayer is attempting to claim. Additional requirements to be aware of before claiming the tax credit are:
- The car was purchased before 2017.
- You are the original owner of the vehicle.
- You drive your car primarily in the U.S.
For those who purchased a plug-in electric vehicle, you could be eligible for the Qualified Plug-In Electric Drive Motor Vehicle Credit. The credit applies to new electric vehicles bought after December 31, 2009. In order to qualify for the credit you will need the following:
- The vehicle must have been purchased new.
- The vehicle must have been made by an eligible manufacturer under the Clean Air Act.
- Have at least four wheels.
- Have the ability to be driven on highways and public streets.
- Have a weight rating of less than 14,000 pounds.
- Purchased an electric motor that uses a rechargeable battery to generate at least 5 kilowatt hours of capacity.
Tax credits for both of these can range from $2,500 to $7,500 based on the vehicle’s battery capacity and the overall size of the vehicle.
- Make a donation for a smaller tax bill
Taxpayers who make charitable contributions such as cellphones, game consoles, computers or any other qualifying electronic donation, can write it off based on the fair market value. In order to be eligible for the tax credit, you must have the following:
- A donation that is valued at less than $500, no forms will be required to be filled out.
- Charitable deductions exceeding $500 must be submitted with Form 8283, which lists the name of the organizations and types of donations made with your tax return.
- Keep a receipt for your files.
- Use Energy Star products
The Energy Star program of the U.S. Environment Protection Agency and the U.S. Department of Energy helps taxpayers save money when they go green. Taxpayers should be advised that not all Energy Star products qualify for the incentive and some tax breaks for energy expired in 2011. There are still a few credits available through 2021 for certain energy programs that have been mentioned above.
If you need tax help, contact us for a free consultation.