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Tax Credits That Lower Your Taxes & Help Your Community!

Posted by Cailey Taylor on Mar 9, 2019 1:00:00 PM

As a taxpayer, each year you must file your federal tax return and see if you will owe taxes or if you get a tax refund. One way you can lower the taxes you owe is by taking advantage of tax deductions and tax credits. A tax credit is a dollar-for-dollar reduction in your tax bill because the credit is applied against your gross income. For instance, if you spend $100 on an energy-efficiency project, the taxes you owe are reduced by $100.  Whether your business has decided to “Go Green” or your family wants to rescue or foster an animal, your expenses for doing these types of things could be tax-deductible.  

Thanks to the ruling by a U.S. Tax Court Judge on Van Dusen V. Commissioner in June 2011, animal rescuers nationwide that are fostering dogs or cats for approved charities may claim the expenses they incur while fostering on their tax return.  You must make sure the charity you’re fostering through is recognized by the IRS. If you are working with a 501(c)(3) shelter, rescue or foster group, your unreimbursed expenses for the group are tax-deductible. This can include food, veterinarian bills, toys and other items needed for fostering.

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You can help the environment and save money by making a long-term investment in an electric car.  You will have to make sure the model of car you purchase qualifies for the EV credit and if it does buyers can credit up to $7,500, not including any local or state incentives.  The IRS determines how much you can write off by the battery capacity of the car. The plug-in hybrid (PHEV) and full electric (EV) vehicles are usually on the more expensive end of a buyer’s options, though you can offset the price premium by taking advantage of federal incentives.  You can find out how much a specific vehicle qualifies here.  We encourage individuals to contact a tax professional to determine how much of the available tax credit you can take advantage of.

For anyone converting their home or second property to a more efficient energy source, should consider claiming the Residential Energy Efficiency Property Tax Credit on their tax return.  Taxpayers can also claim geothermal equipment in both your principal residence and a second home on your tax return. There are a few stipulations and requirements for this tax credit, so make sure you read through them here first before you claim the credit.   

You can try turning the lights off more often or maybe only doing laundry once a month to help the environment and save money, but you may look at taking advantage of these tax deductions and tax credits that will also help you save money! If you need help deciding if any of these tax credits would apply to you, give us a call at 844-841-9857 or click below to schedule a free consultation!

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