Tax season might not seem like an ally to the environment at first glance, but with a bit of awareness and some smart choices, it could be. Imagine filing your taxes in a way that saves paper, energy, and potentially even money—all while contributing to a healthier planet.
It’s totally doable and easier than you think! This guide is here to help you navigate through your self-employed tax responsibilities with the gentlest footprint possible, given your circumstances.
How to Do Your Taxes in a More Eco-Friendly Way
Embarking on doing your taxes offers a perfect opportunity to adopt eco-friendly practices. Let’s explore how you can be kinder to the planet while sorting out your financial responsibilities.
Do All or Most of Your Taxes Online
Doing your taxes on the computer isn’t net-neutral by any means, but it’s definitely more eco-friendly than the alternative: mailing. While the number varies based on the study, a 10g letter averages 140g CO2e, but an email with a large attachment would only reach 26g CO2e.
Embracing the digital age also comes with other positives. For example, you’ll reduce the potential for human error by using tax software to file your returns. The step-by-step guidance provided by these programs ensures that you cover all aspects of your taxes, including identifying possible deductions and credits you might miss, saving you time and money.
Moreover, most tax software is updated annually to reflect current laws and tax codes, making it easier to navigate any changes that could affect your return. These laws could include things that impact sustainability, such as tax credits or how much of your taxes go to green projects.
Freelancers should also request that their clients send them a digital 1099 tax form to both themselves and the IRS. This cuts down on paper and energy due to transportation.
Complete Your Taxes Before the Deadline
Marking tax deadlines in your planner should be one of the first tasks of the new year. Typically, April 15th is set for federal income tax filings, but if this date lands on a weekend or holiday, the deadline may shift to the next business day. Also, note that different rules apply for state returns.
It’s worth noting special extensions are sometimes available under certain circumstances, such as natural disasters or military service. You may also need to keep track of other deadlines. Be active in watching for announcements from the IRS that could affect your filing obligations. Also, an easy way to keep track of these deadlines is by using a calendar with push notifications.
But why should you care about your deadlines in the context of sustainability? Failing to file taxes on time means more back-and-forth between you and the IRS. They may mail you several reminders, which costs more resources. The less you have to interact with the IRS, the better it’ll be for the environment. This is also why you should send all files to the IRS the same day.
If you ever need help with this task, feel free to seek professional advice from an accountant. And if you do speak to an accountant, try to speak with them on the phone, not in person.
Move to a Greener State
While this option isn’t open to everyone, moving to a greener state can help you be more eco-friendly while lowering your tax burden. For example, if you live in a state that’s eco-conscious and provides the most incentives, then you’d have a most sustainable startup.
Let’s start with “green states.” A green state, based on ConsumerAffairs research, is:
- A state that generates the most megawatt-hours (MWh) of new renewable energy (with the award going to Texas generated 116,574,869 MWh) and generates the highest percentage of energy from renewables (with the award going to Vermont at 66.1%)
- A state that generates the lowest greenhouse gas emissions per person (with the award going to Vermont at 0.06 tons per person) and the lowest CO2e output emission rate in pounds per MWh (with Vermont winning once again at 44.8 lbs./MWh
- A state that has the lowest waste generated per capita (with the award going to Missouri at 0.82 tons) and the highest percentage of waste recycled or composted (with Maine winning out for recycling 48% of all waste and Delaware composting 19.8% of waste)
The greenest states in the US are Vermont, Washington, Oregon, Maine, South Dakota, and California. The most non-eco-friendly are Indiana, Mississippi, North Dakota, West Virginia, and Wyoming. If you live in these states, try to move if you have the means or want to.
As for the states that offer the most incentives, this is much easier to figure out. Washington, Minnesota, Oregon, Texas, and Massachusetts will make your money go farther.
This means that Washington is the greenest state on this list. But keep in mind that many of these incentives help out corporations, not freelancers. Still, knowing that Washington is the best state to move to is good to keep in mind if you plan on becoming an S or C Corp.
Capitalize on Green Incentives and Tax Breaks
Green incentives are a great thing for the environment and your wallet. Not only do they save you money (which you can use to make your business more green), but they also encourage others to go green. Freelancers can use these incentives to further their own business.
This ranges from loans to renewable solar incentives. If we take Washington as an example, this state has something called the ‘Federal Solar Investment Tax Credit (ITC) Incentive,’ which provides a tax credit worth 30% of the total purchase price of your solar system. If you’re a homeowner in Washington and purchased a solar panel, you can use this incentive.
There are plenty more you can take advantage of, but many of these incentives or tax breaks are state-specific. With that said, most freelancers can do the following to be more sustainable:
- Use an Electric or Hybrid Car: Freelancers who have purchased a new electric or hybrid car (the hybrid car must have been purchased before 2017) can receive a credit. You can double this incentive by using the alternative motor vehicle gas credit.
- Make a Donation to a Green Organization: If you donate to a green organization, like Greenpeace, you’ll save the planet and lower your tax burden. Consider donating clothing or food to certain charities in your community for a more sustainable approach.
- Purchase Energy Star Products: An appliance that has the Energy Star label could give you a tax incentive. But even if it doesn’t, you’ll still reduce your heating and cooling bill. Only buy a new product if you can’t repair your previous appliances.
There will likely be more tax incentives that encourage you to switch to more eco-friendly technology. This is why you should always stay up-to-date with new tax codes.
Encourage Clients to Be More Sustainable
While you’d ideally work with eco-friendly clients, that isn’t possible for most freelancers. If you’re starting fresh, you’ll need to take whatever you can get to stay afloat.
With that said, freelancers can do their part to make clients more sustainable, which makes tax time less of an environmental burden. For example, speaking to your clients about conducting a sustainability audit can make them realize where they can make improvements. Freelancers can use the Global Reporting Initiative to do their own audits before working with a client.
A savvy, eco-friendly freelancer could help a company switch to renewable energy sources, optimize water usage, install energy-efficient devices, implement waste management systems, or adopt circular economy principles. You could even help them develop eco-friendly products.
And depending on your role in the company, you could educate and engage the staff on the importance of sustainability. Stoke the flames of eco-friendliness by promoting and reporting the impact on social media. After all, companies want good press, and sustainability offers that.
What does this do to make the tax season more sustainable? When the companies you work for are more eco-friendly and use fewer resources, you, in turn, use fewer resources. While individuals aren’t personally responsible for what businesses do, your efforts could create a positive ripple effect in your community. This could make the entire tax process more green.
In Conclusion…
Congratulations on taking steps toward a more sustainable tax experience! Remember, every paper saved, digital form used, and green incentive taken advantage of not only benefits you but also our environment. It’s your opportunity to make a positive impact with something as routine as taxes. So why wait? Embrace the eco-friendly journey in your financial tasks today.
