How your car can drive up your tax savings

How your car can drive up your tax savings

It’s that time again: tax time – the season when hard-working Americans make a formal accounting of the earnings they made over the past 12 months, holding out hope they’ll be due a refund.

The good news is that the government is being extra quick this year with refunds, with 90% of them going back to their rightful owners less than three weeks after filing, according to estimates from the Internal Revenue Service.

Here’s the bad news: Many Americans aren’t taking advantage of all the tax benefits that can put more money back in their pockets.

Poll after poll demonstrates just how many tax deductions are available, but because Americans aren’t aware of them, they often go by the wayside. For instance, many people who are saving up to finance retirement can reduce their tax liability through the Retirement Savings Contributions Credit. And for those who have upgraded their home to become more energy-efficient, the government offers a tax credit for home upgrades on installations like air conditioning, biomass stoves, and insulation.

What’s more, consumers may even be able to notch a financial win after sustaining a property loss.

Tax advantages available after an accident

Traditionally, car accidents are best left in the past, as no one wants to relive the experience, regardless of who was at fault. However, as proof that typically everything has a silver lining, you may be able to deduct some of the losses as a result of the accident from your taxable income. According to tax experts, these can include a totaled vehicle, medical expenses, and personal injuries, if any. However, to obtain it, you first have to file a claim with your insurance company. Additionally, you may only deduct the amount that the insurer doesn’t provide for. If you go to IRS.gov, look for Tax Form 4684 to report the loss, which may include a stolen vehicle.

Some fuel-efficient vehicles eligible for tax savings

According to year-end data from Kelley Blue Book, last year Americans bought more cars than ever before at over 17.5 million, breaking the previous record of 17.3 million set in 2000. Car ownership is the ultimate form of freedom, and buyers can enhance their financial freedom with a variety of tax write-offs.

According to EFile.com, buyers who purchased a fuel-efficient vehicle in 2015 – an electric or alternative fuel, to be specific – may be eligible for the Alternative Motor Vehicle Tax Credit. The credit applies to new cars that are powered by solar energy or a qualified fuel. Example models include the Mercedes-Benz 2012 F-Cell, and Honda FCX models dating back to 2008.

And remember, make sure you file your taxes before April 18, as that’s the last day you can do so without filing an extension.