Happy Earth Day to You!
Today marks the 49th annual celebration of Earth Day. Will you spend the day cleaning up litter, pledging to do a better job recycling, planting a honey bee friendly garden, or simply enjoying being in nature? However you decide to spend the day, take a few minutes to discover some ways being a good steward of the environment can help reduce your tax bill.
Practically every article on global warming mentions the effect gas-powered automobiles have on the environment. For several years now, the federal government has offered tax incentives for purchasing hybrid and electric vehicles. These credits are phased out after sales reach pre-set targets. Credits for non-plugin hybrids are no longer available because the vehicles became popular enough that the limits were reached. However, some models of plugin hybrids and many models of fully electric vehicles are still eligible for tax credits. This website , maintained by the federal government, keeps an updated list of credits available. These credits reduce taxes owed dollar-for-dollar, so they can be quite valuable to taxpayers who purchase qualifying vehicles.
Another area often mentioned when talking about the environment is the amount of energy required to keep our homes comfortable. There used to be incentives for buying energy-efficient appliances, but those expired several years ago. More recently, taxpayers could get tax breaks for installing energy-efficient doors and windows and even HVAC systems; these credits expired at the end of 2017 and were not renewed for the tax year just ended.
However, there is still a Residential Energy Efficient Property Credit available for taxpayers who install certain solar, wind, geothermal, or fuel-cell technology this year. The credits are reduced next year and disappear altogether after 2021. Anyone contemplating the purchase of any of this equipment should certainly take time to understand the details of these credits to maximize the amounts they qualify for.
Those of us who aren’t looking to buy a new vehicle or to renovate our homes to use alternative energy sources might still catch a tax break by making charitable contributions. There are many organizations dedicated to protecting the earth’s resources that qualify for a charitable donation tax deduction. You can use the IRS Tax Exempt Organization Search tool to look up a prospective charity before donating to make sure your gift will be tax-deductible. Also, remember that donations of clothing and household goods that are in good condition can qualify for a tax deduction. If you contribute items to organizations such as Goodwill or Habitat for Humanity, you can request a receipt. It’s up to you to provide the value of the items donated. More information of donating cash and goods can be found in our previous blog. Taxpayers who don’t itemize do not benefit from charitable deductions, but hopefully they will still donate unwanted household goods to keep these items out of the landfill and in the hands of others who can still use them.
Finally, there’s no tax incentive to do so, but many of us want to get rid of old tax documents that are no longer needed. (But keep everything for seven years!) Many communities offer free shred days, where these documents will be destroyed and then recycled. It’s been estimated that one ton of shredded and recycled paper saves as many as 17 trees, 380 gallons of oil, and an astonishing 7000 gallons of water. That’s certainly a win for the environment!
We encourage everyone to be good stewards of the environment today and every day… and there’s certainly nothing wrong with saving a little money while you do your part to save the planet!