We’re rollin’ up on another tax season! Taxes are how we finance the luxuries in our country like military protection for unpredictable circumstances, smooth roadways for your next adventure, preserved national parks to enjoy and many more. But we don’t need to be giving Uncle Sam more than the money he’s due.Check out these tips and tricks to make sure you’re not overpaying during this year’s tax season.
Second home deductions
OK, quick truth moment. The money you’re actually paying for your RV isn’t tax deductible. So why is it on this list? We’re glad you asked! If you had to take out a loan to pay for your new ride, the interest you’re paying on it every month is deductible (just like a typical home loan). Though every bank has its own set of procedures, you’ll usually receive a card in the mail that has the amount of interest you paid last year. When you go to get your taxes done, you’ll need to bring this sheet so your CPA can calculate how much you can put toward your credit.
There’s a fine line drawn between a business expense (tax deductible) and a general expense (not tax deductible). In a traditional home, you need to have a dedicated office space in your home where you exclusively run your business to be eligible to claim a deduction. Likewise, you can claim your RV for business expenses if you’ve got the same set up. This includes any maintenance costs, camping and registration fees, depreciation — the works. As long as there’s a separate office space in your floor plan, you’re in business to push for this deduction.
Establish residency in a state without income taxes
This isn’t exactly a way to save taxes on your RV, but it is a tactic used by many full-timers looking to keep a little more in their pocket when Uncle Sam comes a-knockin’. In some states (South Dakota, Texas, Alaska, Nevada, Wyoming, Florida and Washington), residents aren’t charged based on how much they take home. Instead, they’re charged in other ways like how much they pay for food and household goods. Filing all the paperwork you need to establish residency in one of these states means you won’t have to pay income tax, and traveling in your RV means you won’t be a slave to the higher price of living.
Get rewarded for going green
If you’ve jumped on the green bandwagon and invested in (or installed) solar panels on your rig, prepare to be rewarded for your efforts to save the globe. This year, 2016, the federal government is allowing a 30% deduction for solar panels. This 30% comes off of the amount you were charged for installation, so hang on to that receipt in exchange for a pretty penny!
No one likes paying taxes. They’re cumbersome, a burden and a flat out pain to file. But we can all agree they’re necessary. While we don’t encourage tax evasion, we do support saving you money. Who knows? With all those savings, you could discover another way to explore and enjoy your Good Life.