It's Tax Season. That dreaded time of year when you have to look through all of your receipts and try to piece together your spending for the year to file your taxes and hope you get a refund. In addition to the tax credits and usual tax benefits, you can also get tax credits for going green. Going green can qualify you for federal tax deductions for individuals as well as businesses.
Businesses that make changes in their appliances and products can get federal tax credits including those that recycle, buy recycling equipment, or use recycled materials. These can include items such solar water heaters which could qualify for a tax credit of 30 percent of the cost of the appliance.
Many state taxing authorities offer tax deductions and tax credits for going green to individuals. New legislation allows employers to give employees up to $20 a month for riding a bike to work. Employers can reimburse up to $230 per month of an employee’s public transportation expenses.
Solar homeowners and businesses can get tax credits for installing solar panels and solar powered water heaters. Solar water heaters may qualify for a tax credit of up to 30% of the purchase price. Improvements to a taxpayer's primary residence must be made before January 1, 2011. Here are 5 tax tips to go green.
1. Residential Energy Efficient Property Credit. This tax credit qualifies residential energy appliances such as solar hot water heaters, solar electricity equipment, geothermal heat pumps and wind turbines installed in or on the home and ends in 2016. The credit is 30% of the cost of home.
2. Plug-in Electric Vehicle Credit. This tax credit is for two types of plug-in vehicles: two- or three-wheeled vehicles or certain low-speed electric vehicles. The credit is 10% of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after February 17, 2009, and before January 1, 2012.
3. Residential Energy Property Credit. This tax credit is for homeowners who make energy efficient improvements to their existing homes. The credit is 30 percent of the cost of all improvements. The credit applies to improvements such as energy efficient windows, insulation, heat pumps and energy-efficient heating and air conditioning. The maximum credit is $1,500 for improvements placed in service in 2010.
4. Credit for Car Conversion Kits. This credit is for car owners who convert a vehicle to a qualified plug-in electric vehicle. This credit is 10% of the cost of converting a vehicle that is placed in service after Feb. 17, 2009. The maximum credit is $4,000 and ends in 2011.
5. Treatment of Alternative Motor Vehicle Credit. This credit allows the Alternative Motor Vehicle Credit, including the tax credit for purchasing hybrid vehicles, to be applied against the Alternative Minimum Tax (AMT).
To claim the green tax credit you must file out Form 5695, Residential Energy Credits. Manufacturers must certify that their products meet the green standards and they must provide a written statement to the taxpayer in the product packaging or on the manufacturers’ website.
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