Tax credits 2013
A number of federal tax credits exist to help taxpayers retain more of their earnings. Identifying which credits apply to you will reduce your pain as you prepare to file your income tax return. Gather your documents to get the most tax credits 2013.
Donate conservation property
A conservation easement tax deduction may significantly lower your tax bill. Through year-end conservationists who donate property or easements on their property to conservation organizations like the Nature Conservancy or a local land trust get an enhanced tax break that’s helped modest-income landowners; these enhancements are good through year-end. Section 170(f)(8) of the Internal Revenue Code clearly states that all charitable gifts valued at $250 or more must be substantiated by a letter acknowledging the gift and stating that the donor received no goods or services in return (or estimating the value of goods provided in the case of a bargain sale). This requirement applies to easement donations. For more details, see Conservation Easement Tax Deduction.
Remodel for energy-efficiency
There’s a $500 tax credit (that’s a dollar for dollar savings) for making certain energy-efficient improvements to your home. The Non-Business Energy Property Credit gives you a credit of up to $500 in a lifetime for making certain energy efficient upgrades to your primary residence, including replacing insulation, roofing, and doors, or adding double-paned windows (though you may use only $200 of this limit for windows). The Residential Energy Efficient Property Credit is a hefty tax credit worth 30 percent of the full cost of renewable energy systems such as solar hot water heaters, solar electric equipment, and wind turbines. The credit is only for the cost of the systems, not for the installation labor. You need the manufacturer’s certification for this credit, as well. If the credit is higher than your tax liability, you may carry it over to future years.
Electric vehicle tax credit
A tax credit for certain 2 or 3 wheeled electric vehicles expires at year-end. A separate tax credit of $7,500 is available for 4-wheeled electric vehicles including the 2012-2014 Ford Focus Electric, the 2013 Ford Fusion Energi, the 2013 Ford C Max Energi and the 2011-2012 Nissan Leaf and will be phased out once a manufacturer’s has sold 200,000 vehicles.
For vehicles acquired after December 31, 2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500.
State and local sales tax
CCH pegs this one as “the most politically-backed extender” so you probably don’t have to worry about it going away. But to be safe, if you’re a taxpayer who deducts state and local sales tax (in lieu of state and local income tax) and you’re contemplating big purchases in the near term you might want to make them in 2013.