4 Green Tax Credits Available for Environmentally Friendly Businesses

Now more than ever, small businesses and tax payers in general are looking for greener options when it comes to tax deductions. From fuel-efficient vehicles to growing trees, here’s a look at green tax credits that environmentally friendly businesses can deduct this year.

Every tax season, there’s a big focus placed on the latest deduction trends – what new big purchase from the year can help reel in the biggest deduction for a small business.

Now more than ever, small businesses and taxpayers in general are looking for greener options when it comes to tax deductions.Outside of the principle of being able to do some good while saving money, many entrepreneurs also run their businesses out of their homes and there are plenty of credits available that they might overlook otherwise. From fuel-efficient vehicles to growing trees, here’s a look at what green businesses can deduct this year on their tax returns.

Using your fuel-efficient vehicle for work

You can score some major deductions on using your car for work purposes. As stated by the IRS, the 2014 standard mileage rates for cars, vans, and pickup trucks is 56 cents per mile for business miles driven, 23.5 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations.

A shortlist of the deductions available include driving anywhere from work to another work site, going to a meeting, or meeting a client. You can get that driving money back for parking fees/tolls, registering your vehicle, rental expenses, gas, insurance and maintenance. For more information about the credits available for electric vehicles and plug-in hybrids, check out the U.S. Department of Energy’s fuel efficient vehicle tax incentives information center.

This year, make those charitable deductions green

Publication 526 for charitable contributions lays out the organizations qualified to receive deductible contributions as well as examples of what is and isn’t a deductible contribution.  One great option for companies of all kinds is to make a donation for old electronic devices. Maybe your business is updating its computers; by dropping them off, or even having them picked up, at a qualified charity organization such as Goodwill, you are preventing the mixing of hazardous materials with our landfills.

Deduct the very roof you work under!

Your own office may qualify for an Energy Efficiency Tax Deduction. Available for commercial property owners and leaseholders, this deduction can save you as much as $1.80 per square foot of your work building, if your building holds a 50% reduction in energy and power costs (i.e. if your office shows signs of energy efficiency in areas including interior lighting, heating, cooling, ventilation and hot water systems).

These energy-saving tools may be pricey to install at first, but they can save you and your business plenty of money in the long run – and a tax deduction can help you gain some of that installation money back.

Got a green thumb? That’s deductible!

Some states have obscure deductibles that, for the savvy business owner, need to be rooted out for extra savings. South Carolina residents receive $50 if they donate a deceased deer to the poor, and if you grow state-approved trees in Hawaii, you’re looking at as much as $3,000 in deductions! Scout out some of the lesser-known deductions available within your state – you never know what you’ll find that can apply to your business. 

What green tax credits does your business qualify for? Let us know in the comments!

Deborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Google+ and on Twitter @mycorporation.

New White Paper: Five Proven Methods to Reduce Small Business Taxes

January is always a busy month around Shoeboxed HQ. The beginning of each new year brings lots of New Year’s resolutions on getting organized, the launch of some great new features and… the dreaded countdown to April 14th. Years change, but unfortunately tax day never does.

Since tax season is important to all of you, it’s important to us, and this year we wanted to be as proactive as possible in helping you get prepared. After all, who doesn’t enjoy reducing their tax burden?

With that in mind, we’re pleased to release our brand new white paper: Five Proven Methods to Reduce Small Business Taxes.

Shoeboxed White Paper Five Proven Methods to Reduce Small Business TaxesWith the help of Stancil & Company CPAs we set out to answer the simple question: what’s the best way for you and your small business to save on taxes this April? In the white paper we explore:

  • Why a well-designed retirement plan is the easiest way to save on taxes
  • Why identifying the proper method of accounting is crucial to tax savings
  • The best way for your children to help you maximize deductions
  • Tons more!

Download our free white paper today and prepare to save on your small business taxes this April!

Stay Organized,

The Shoeboxed Tax Team

Tax Tip: Tax Credit to Aid First-Time Homebuyers; Must Be Repaid Over 15 Years

Internal Revenue Service Tax Tips on Shoeboxed Blog

WASHINGTON – First-time homebuyers should begin planning now to take advantage of a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008.

Available for a limited time only, the credit:

  • Applies to home purchases after April 8, 2008, and before July 1, 2009.
  • Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
  • Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.

However, the credit operates much like an interest-free loan, because it must be repaid over a 15-year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return.

Eligible taxpayers will claim the credit on new IRS Form 5405. This form, along with further instructions on claiming the first-time homebuyer credit, will be included in 2008 tax forms and instructions and be available later this year on IRS.gov, the IRS Web site.

If you bought a home recently, or are considering buying one, the following questions and answers may help you determine whether you qualify for the credit.

Q. Which home purchases qualify for the first-time homebuyer credit?

A. Only the purchase of a main home located in the United States qualifies and only for a limited time. Vacation homes and rental property are not eligible. You must buy the home after April 8, 2008, and before July 1, 2009. For a home that you construct, the purchase date is the first date you occupy the home.

Taxpayers who owned a main home at any time during the three years prior to the date of purchase are not eligible for the credit. This means that first-time homebuyers and those who have not owned a home in the three years prior to a purchase can qualify for the credit.

If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 (or amended 2008 return) or 2009 return.

Q. How much is the credit?

A. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing jointly. The limit is $3,750 for a married person filing a separate return. In most cases, the full credit will be available for homes costing $75,000 or more. Whatever the size of the credit a taxpayer receives, the credit must be repaid over a 15-year period.

Q. Are there income limits?

A. Yes. The credit is reduced or eliminated for higher-income taxpayers.

The credit is phased out based on your modified adjusted gross income (MAGI). MAGI is your adjusted gross income plus various amounts excluded from income—for example, certain foreign income. For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000.

This means the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.

Q. Who cannot take the credit?

A. If any of the following describe you, you cannot take the credit, even if you buy a main home:

  • Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
  • You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
  • You stop using your home as your main home.
  • You sell your home before the end of the year.
  • You are a nonresident alien.
  • You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year.
  • Your home financing comes from tax-exempt mortgage revenue bonds.
  • You owned another main home at any time during the three years prior to the date of purchase. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another main home at any time from July 2, 2005, through July 1, 2008.

Q. How and when is the credit repaid?

A. The first-time homebuyer credit is similar to a 15-year interest-free loan. Normally, it is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. The repayment amount is included as an additional tax on the taxpayer’s income tax return for that year. For example, if you properly claim a $7,500 first-time homebuyer credit on your 2008 return, you will begin paying it back on your 2010 tax return. Normally, $500 will be due each year from 2010 to 2024.

You may need to adjust your withholding or make quarterly estimated tax payments to ensure you are not under-withheld.

However, some exceptions apply to the repayment rule. They include:

  • If you die, any remaining annual installments are not due. If you filed a joint return and then you die, your surviving spouse would be required to repay his or her half of the remaining repayment amount.
  • If you stop using the home as your main home, all remaining annual installments become due on the return for the year that happens. This includes situations where the main home becomes a vacation home or is converted to business or rental property. There are special rules for involuntary conversions. Taxpayers are urged to consult a professional to determine the tax consequences of an involuntary conversion.
  • If you sell your home, all remaining annual installments become due on the return for the year of sale. The repayment is limited to the amount of gain on the sale, if the home is sold to an unrelated taxpayer. If there is no gain or if there is a loss on the sale, the remaining annual installments may be reduced or even eliminated. Taxpayers are urged to consult a professional to determine the tax consequences of a sale.
  • If you transfer your home to your spouse, or, as part of a divorce settlement, to your former spouse, that person is responsible for making all subsequent installment payments.