With just days to go to file your 2021 tax return, you need to make sure you have exhausted all opportunities to save money and claim available credit where you can. For many eco-aware homeowners and business owners, going green can save you a lot of green on your taxes.
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There are plenty of fast, easy and effective environmentally conscious decisions you can make around your house, but they don’t permanently reduce your fossil-fuel-burning appliances’ carbon footprints or improve your home’s ability to retain warm or cool air. To make a lasting, meaningful difference in your home’s energy profile, your home requires more involved — and often expensive — home improvements and upgrades. On the road, many drivers are switching to hybrid or electric vehicles to avoid soaring gas prices and drive a cleaner alternative. But EVs aren’t cheap either.
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Fortunately, several federal tax credits are designed to make boosting energy efficiency more attractive to EV drivers, homeowners and various types of business owners by partially offsetting the high cost of green energy purchases and projects. And because we are talking about tax credits, they are dollar-for-dollar reductions in your tax bill because the credit is applied against your gross income (whereas tax deductions come into play after your gross income is determined).
Here are some of the credits to consider. Note that most “green” tax credits have expiration dates, so this year might be the last to use them for your 2021 filing.
Homeowners’ Energy Credit
Extended to cover the installation of energy-efficient items through December 31, 2021, the nonbusiness energy property credit is worth a maximum of $500 for all years combined, from 2006 to its expiration of qualified energy efficiency improvements (home insulation, exterior doors and windows, some roofing materials) and residential energy property costs (electric heat pumps, natural gas, oil and propane water heaters, furnaces and boilers, central air conditioning).
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Solar and Wind Residential Credit
Under the Consolidated Appropriations Act of 2021, the renewable energy tax credits for fuel cells, small wind turbines, and geothermal heat pumps now feature a gradual step down in the credit value, the same as those for solar energy systems. This credit expires at the end of December 2023 and has gradually decreasing credits for the following installation dates: 30% for systems installed by December 31, 2019, 26% for …….