Great Video! I had new HVAC installed. The provider gave us invoice with one total cost. Do I just split the total and put half the cost in line 22A for AC and half the cost on line 24A the furnace?
It's not ideal, but you can do it that way. Under audit, you might have to get an itemized bill for each system. Since each component of the system is > $2,000 each should qualify for the Credit.
No, according to the IRS, costs related to replacement or strengthening of building components to accept solar panels is not eligible for the Credit. BTW, the Residential Energy Credit is described in this video: th-cam.com/video/UHoHEEZEJkU/w-d-xo.html The Solar Investment Tax Credit is a completely different credit that is taken by videos.
We need to have a new front door installed before winter, you can feel the cold air seeping in during the winter. Would this be a part of the energy rebate?
Does AC flex duct count as insulation? If so ,would it make sense to have my duct work half in december and half in January for my new heat pump / slash AC? They said i need new duct work but it is almost as much as the imstalled system will be? So could i include duct work under the 1200 credit ( it is a type of insulation and expensive) and the heat pump under the 2000 credit? Thank you Just thought maybe this way i could take the 1200 credit for both years?
There is no clear answer to this question from what I've researched. To be on the conservative side, the general consensus is that Credit covers additional insulation to the building envelope rather than the ductwork. But remember, if you install a heat pump, that qualifies for a separate $2,000 tax credit in addition to the $1,200 you might qualify for the rest of the system (air handling equipment, etc.).
Had to replace central AC unit and hot water heater in our home this year. We did not have an energy audit - just replaced them when they broke down. Can I still apply for the Energy Efficient home improvement credit? Thanks for any help you can provide on this question.
Great videos. I am starting watch the videos that pertain to my situations.. In May of 2023, we had an entire A/C system installed with a new heat pump, which required new wiring for the entire system. The cost was close to $18, 500. I want to spread that over at least two years for the tax credit. How should I break that up, cost wise, to get the credits? Thank you. Ken
Unfortunately, as I said in the video, the Credit must be taken in the year the improvements are installed, so you can't spread them out over several years. But you would be eligible for a credit of up to $600 for the rewiring and up to $2,000 for the heat pump.
@@TheTaxGeek@TheTaxGeek So, correct me if I am wrong, but if I decide to upgrade my windows, I can install several windows per year rather than installing all 12+ windows in one calendar year, thus taking advantage of the maximum credits allowed per year? Also, does a rental home qualify for this credit? Thanks
Will the total cost reported for a particular home improvement (eg. heat pump appliance installation) be affected by local state rebates awarded to the homeowner claiming the federal energy tax credit?
Most state and local incentives do not have to be subtracted from the cost of the improvements (but check to make sure); however, rebates and incentives offered by utility companies or manufacturers/installers do have to be subtracted.
Can I take the credit if I move to a second home already purchased that were upgraded with energy efficient products? I will become personal residence next week of second home which was purchased three years ago.
As long as you have a tax liability (which is the number on line 16 of your form 1040, you can take advantage of the credit to lower that figure and increase your refund.
There is a tile that says the credit may not be taken for qualifying items installed as part of a homes original construction. Q: Can you ask if the home has had a full gut renovation and the items were added if that is considered improvement or original construction? Q: are receipts for the improvement needed to file 5695 or only if there is an audit?
If qualifying improvements are made as part of a full renovation of the home, they are eligible for the Credit. You don't need to provide receipts or contracts to complete and file 5695, but you should retain them in case the return is audited.
how do i see the tax credit if i owe IRS does it come off automatically? i owe irs $1000 but the insulation credit is $1200 but its not coming off before filing? guide
I plan to install mini split system in my home, but now I’m thinking of spreading out the installation across two years to claim the credit twice. I would install one now (heat pump + air handler) and the other (air handler only) in 2025. Is that allowed?
@@TheTaxGeekthanks for the info! This is great news! I wasn’t sure if adding the additional air handler (wall unit) only, connected to the existing heat pump condenser, in 2025 qualified for the tax break again.
I'm not understanding the carryover credit for 2022. I only claimed $200 last year but we installed about $21,000 in energy efficient windows, sliding glass door and a storm door. Can I claim any of this for my 2023 return? Thank you
The former Residential Energy Credit was a credit that was limited to $500 in one's lifetime. By 2022, very few people could take the credit as they had taken it in previous years. The new Credit has an annual limitation. However, the new Credit is claimed in the years the improvements were installed. Therefore, you cannot claim your 2022 installation in 2023, even if it was paid for in 2023.
So you can't carry over credits for a geothermal heat pump system? Only the $2000.00 max for the year installed? We were told we could spread out the 30% credit over time using the $2K per year over time. So for instance, if 30% is $4000.00 we can't take $2000 over a period of 2 years?
No. The Residential Energy Efficient Home Improvement Credit cannot be carried forward. I assume you were told this by the person who sold you the system, all (or most) of them are not qualified Tax Professionals.
Line 22 is designated for ordinary high-efficiency air conditioners, and line 29 is designated for heat pumps. The good news is that the $2,000 heat pump credit is separate from the $1,200 annual credit for other improvements.
I'm getting rejected filing direct online. I'm only claiming a high efficiency tankless water heater install, $600 credit. Shouldn't you put 1040 line 18 value on form 5695 line 31? That's the way the instructions tell me to do. Also, since this is only a "Residential Energy Property Expenditure," do I need to fill out my address and appropriate check boxes in Part II Section A as well? Need help! Thanks so much.
Yes, the amount from line 18 should be entered on line 31 of form 5695. You do not need to fill out Section A. Boxes 21 a and b should be ticked "yes." The property address should be entered on line 21c. The full cost of your water heater is entered on line 23a and 30% of that cost, or $600, whichever is lower, is entered on line 23b. Check "no" for Box 26a and enter $600 on lines 27, 28, and 30. Are you sure it's rejecting on the energy credit? There are many other reasons why returns can reject, and online providers aren't usually very good at telling you.
@@TheTaxGeek Yup, just like I thought. It's crazy because I've went over and over this so many times it's driving me crazy. I've got Schedule 3 line 5b and line 8 at $600, that's it. I'm using the IRS online portal "Free Fillable Forms" to do all this. It comes back with "Issue : Business Rule S3-F1040-024 - If Schedule 3 (Form 1040), `EgyEffcntHmImprvCrAmt` has a value greater than zero, then it must be equal to the sum of all Forms 5695, `EgyEffcntHmImprvCrAmt`." I've got line 32 on the 5695 at $600. I'm stumped. Thanks for all your help brother!
@@TheTaxGeek Oh yeah, it also comes back with this: "The following information may help you determine the form at issue: Field/Xpath: /efile:Return/efile:ReturnData/efile:IRS1040Schedule3/efile:EgyEffcntHmImprvCrAmt" Lol! Like that does me any good. I've tried to search till blue in the face on this, no Beuno.
Great video tax geek. You lost me at the 1200 max is that just for doors and windows or insulation too? Furthermore I have an additional video recommendation for you, the church giving deduction of 2023 I believe was 600. I paid turbotax deluxe but I couldn't do it is that accurate or nah?
The overall annual limit for the Credit is $1,200. Within that limit, there are sub-limits that apply to doors and windows. However, if none of these items are purchased, the entire $1,200 credit can be used for insulation. I wish it weren't this complicated, but it is. As for charitable contributions, there was, as a pandemic relief measure, a deduction for up to $300 ($600 MFJ) in contributions that could be taken even if the taxpayer didn't itemize. That provision has expired.
For an electric heat pump, am I correct that it doesn’t have to be the principal residence to qualify, rather just a residence? I think that it is what is says here www.irs.gov/pub/taxpros/fs-2024-15.pdf
You are correct, heating and cooling equipment (including heat pumps) can be installed in any home you resided in during the year. It does not have to be your principal residence.
Very nice step-by-step tutorial with actual sample numbers 👍 Thank you.
Thank you, thank you, thank you for that easy and clear explanation on how to fill out form 5695.
December 16th, 2024: I love your channel. It’s helpful for studying. I’m working to be a 1st year tax preparer. 😊😊
Thanks for the kind words....and good luck with your studies and future career!
Wow. I’m gonna watch this entire series.
... and the businesses we start will make so much money helping people save their money/the planet...
Great Video! I had new HVAC installed. The provider gave us invoice with one total cost. Do I just split the total and put half the cost in line 22A for AC and half the cost on line 24A the furnace?
It's not ideal, but you can do it that way. Under audit, you might have to get an itemized bill for each system. Since each component of the system is > $2,000 each should qualify for the Credit.
For attic insulation, do I ask to have the labor broken out from the material? I am not sure the labor is deductible,
Yes, for that type of home improvement, only the material cost qualifies for the Credit.
Thanks for your video. Is replacement of the roof that was required by the solar company eligible to include in the base for ITC?
No, according to the IRS, costs related to replacement or strengthening of building components to accept solar panels is not eligible for the Credit. BTW, the Residential Energy Credit is described in this video: th-cam.com/video/UHoHEEZEJkU/w-d-xo.html The Solar Investment Tax Credit is a completely different credit that is taken by videos.
We need to have a new front door installed before winter, you can feel the cold air seeping in during the winter. Would this be a part of the energy rebate?
Yes, you would receive a nonrefundable tax credit of 30 percent of the cost of the door (but on the installation), up to $250.
Does AC flex duct count as insulation? If so ,would it make sense to have my duct work half in december and half in January for my new heat pump / slash AC?
They said i need new duct work but it is almost as much as the imstalled system will be?
So could i include duct work under the 1200 credit ( it is a type of insulation and expensive) and the heat pump under the 2000 credit?
Thank you
Just thought maybe this way i could take the 1200 credit for both years?
There is no clear answer to this question from what I've researched. To be on the conservative side, the general consensus is that Credit covers additional insulation to the building envelope rather than the ductwork. But remember, if you install a heat pump, that qualifies for a separate $2,000 tax credit in addition to the $1,200 you might qualify for the rest of the system (air handling equipment, etc.).
@TheTaxGeek Thank You
Had to replace central AC unit and hot water heater in our home this year. We did not have an energy audit - just replaced them when they broke down. Can I still apply for the Energy Efficient home improvement credit? Thanks for any help you can provide on this question.
Yes, as long as both components are EnergyStar certified.
Thanks!
Great video! It may have been mentioned but is an energy audit a requirement?
No. An energy audit is not required to get the credit for qualifying expenses.
Great videos. I am starting watch the videos that pertain to my situations.. In May of 2023, we had an entire A/C system installed with a new heat pump, which required new wiring for the entire system. The cost was close to $18, 500. I want to spread that over at least two years for the tax credit. How should I break that up, cost wise, to get the credits? Thank you. Ken
Unfortunately, as I said in the video, the Credit must be taken in the year the improvements are installed, so you can't spread them out over several years. But you would be eligible for a credit of up to $600 for the rewiring and up to $2,000 for the heat pump.
@@TheTaxGeek@TheTaxGeek So, correct me if I am wrong, but if I decide to upgrade my windows, I can install several windows per year rather than installing all 12+ windows in one calendar year, thus taking advantage of the maximum credits allowed per year?
Also, does a rental home qualify for this credit? Thanks
Will the total cost reported for a particular home improvement (eg. heat pump appliance installation) be affected by local state rebates awarded to the homeowner claiming the federal energy tax credit?
Most state and local incentives do not have to be subtracted from the cost of the improvements (but check to make sure); however, rebates and incentives offered by utility companies or manufacturers/installers do have to be subtracted.
@TheTaxGeek Thanks, Tax Geek. I appreciate the quick answer.
Can I take the credit if I move to a second home already purchased that were upgraded with energy efficient products? I will become personal residence next week of second home which was purchased three years ago.
No, you can only take the Credit in the year the improvements are installed.
I’m sorta confused. If you are due a tax return before these credits can you still take advantage of them?
As long as you have a tax liability (which is the number on line 16 of your form 1040, you can take advantage of the credit to lower that figure and increase your refund.
There is a tile that says the credit may not be taken for qualifying items installed as part of a homes original construction.
Q: Can you ask if the home has had a full gut renovation and the items were added if that is considered improvement or original construction?
Q: are receipts for the improvement needed to file 5695 or only if there is an audit?
If qualifying improvements are made as part of a full renovation of the home, they are eligible for the Credit.
You don't need to provide receipts or contracts to complete and file 5695, but you should retain them in case the return is audited.
Thank you!
how do i see the tax credit if i owe IRS does it come off automatically? i owe irs $1000 but the insulation credit is $1200 but its not coming off before filing? guide
The Credit should show up on line 20 of your Form 1040, where it reduces your tax liability. Without it, your balance due might have been $2,200.
I plan to install mini split system in my home, but now I’m thinking of spreading out the installation across two years to claim the credit twice. I would install one now (heat pump + air handler) and the other (air handler only) in 2025. Is that allowed?
It certainly is allowed, and can be a good strategy, especially since heat pumps have a higher annual limit.
@@TheTaxGeekthanks for the info! This is great news! I wasn’t sure if adding the additional air handler (wall unit) only, connected to the existing heat pump condenser, in 2025 qualified for the tax break again.
I'm not understanding the carryover credit for 2022. I only claimed $200 last year but we installed about $21,000 in energy efficient windows, sliding glass door and a storm door. Can I claim any of this for my 2023 return? Thank you
The former Residential Energy Credit was a credit that was limited to $500 in one's lifetime. By 2022, very few people could take the credit as they had taken it in previous years. The new Credit has an annual limitation. However, the new Credit is claimed in the years the improvements were installed. Therefore, you cannot claim your 2022 installation in 2023, even if it was paid for in 2023.
So you can't carry over credits for a geothermal heat pump system? Only the $2000.00 max for the year installed? We were told we could spread out the 30% credit over time using the $2K per year over time. So for instance, if 30% is $4000.00 we can't take $2000 over a period of 2 years?
No. The Residential Energy Efficient Home Improvement Credit cannot be carried forward. I assume you were told this by the person who sold you the system, all (or most) of them are not qualified Tax Professionals.
Did this change, you used to be able to carry the unused portion forwa
can the cost of a heat pump be included on lines 22 ($600 Max) and 29 ($2,000 Max)? Does not seem likely but this the IRS
Line 22 is designated for ordinary high-efficiency air conditioners, and line 29 is designated for heat pumps. The good news is that the $2,000 heat pump credit is separate from the $1,200 annual credit for other improvements.
Thank You... 😘
You're welcome 😊
Is the $600 credit for windows per year or total? Meaning, could i get 600$ each year I replace some windows?
Yes.
I'm getting rejected filing direct online. I'm only claiming a high efficiency tankless water heater install, $600 credit. Shouldn't you put 1040 line 18 value on form 5695 line 31? That's the way the instructions tell me to do. Also, since this is only a "Residential Energy Property Expenditure," do I need to fill out my address and appropriate check boxes in Part II Section A as well? Need help! Thanks so much.
Yes, the amount from line 18 should be entered on line 31 of form 5695. You do not need to fill out Section A. Boxes 21 a and b should be ticked "yes." The property address should be entered on line 21c. The full cost of your water heater is entered on line 23a and 30% of that cost, or $600, whichever is lower, is entered on line 23b. Check "no" for Box 26a and enter $600 on lines 27, 28, and 30.
Are you sure it's rejecting on the energy credit? There are many other reasons why returns can reject, and online providers aren't usually very good at telling you.
@@TheTaxGeek Yup, just like I thought. It's crazy because I've went over and over this so many times it's driving me crazy. I've got Schedule 3 line 5b and line 8 at $600, that's it. I'm using the IRS online portal "Free Fillable Forms" to do all this. It comes back with "Issue : Business Rule S3-F1040-024 - If Schedule 3 (Form 1040), `EgyEffcntHmImprvCrAmt` has a value greater than zero, then it must be equal to the sum of all Forms 5695, `EgyEffcntHmImprvCrAmt`." I've got line 32 on the 5695 at $600. I'm stumped. Thanks for all your help brother!
@@TheTaxGeek Oh yeah, it also comes back with this: "The following information may help you determine the form at issue:
Field/Xpath: /efile:Return/efile:ReturnData/efile:IRS1040Schedule3/efile:EgyEffcntHmImprvCrAmt" Lol! Like that does me any good. I've tried to search till blue in the face on this, no Beuno.
Suppose you are low income and don't owe any taxes?
Then, unfortunately, you don't get the Credit. The Credit is non-refundable.
Great video tax geek. You lost me at the 1200 max is that just for doors and windows or insulation too? Furthermore I have an additional video recommendation for you, the church giving deduction of 2023 I believe was 600. I paid turbotax deluxe but I couldn't do it is that accurate or nah?
The overall annual limit for the Credit is $1,200. Within that limit, there are sub-limits that apply to doors and windows. However, if none of these items are purchased, the entire $1,200 credit can be used for insulation. I wish it weren't this complicated, but it is.
As for charitable contributions, there was, as a pandemic relief measure, a deduction for up to $300 ($600 MFJ) in contributions that could be taken even if the taxpayer didn't itemize. That provision has expired.
For an electric heat pump, am I correct that it doesn’t have to be the principal residence to qualify, rather just a residence? I think that it is what is says here www.irs.gov/pub/taxpros/fs-2024-15.pdf
You are correct, heating and cooling equipment (including heat pumps) can be installed in any home you resided in during the year. It does not have to be your principal residence.
If I rent my house but I've done work to my home. Can I qualify for energy credit
No. You must own the home.
Would love to see heat pump hot water heater
They do exist! They might not be at your favorite big-box hardware store, but you should be able to get one through a regular plumbing contractor.
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