Awesome TurboTax expert @JotikaT2 provided a link for additional details which listed in the second to last paragraph that the current legislation for this credit is expiring at the end of 2023 (despite being available for a credit carryforward of up to 20 years). This credit was initially set to expire starting in 2022, but it was renewed for one more year. It may be renewed or changed in the future.
TurboTax will automatically calculate the maximum credit available based on what is entered.
To do this in TurboTax, from inside the program, enter residential energy credit in the search box and click the Jump to link in the search results.
Keep in mind that solar and wind energy efficient improvement details are not entered in the initial energy-efficient screen where exterior doors, windows, etc. expenses are entered. Continue through the screens to get to the Additional Energy-Efficient Improvements section. Report any amounts of residential energy credits that have been claimed since 2006.
Solar electric property that was placed in service in 2020 is eligible for a tax credit of 26 percent of the costs for assembly, preparation, and installation as well as piping and wiring. If solar electric property was installed for your main home in 2019, the tax credit would have been 30 percent.
There are two types of energy property that you can place into service.
Nonbusiness Energy Property - If you placed property into service like doors, windows, insulation, water heaters, etc.:
- The maximum credit for this type of property is $500, no matter how much you spend. It is calculated as 10% of the amount paid for the property, limited to $500.
- The amount of credit allowed is limited to the amount of your tax liability. Also, this is a non-refundable credit and it is not carried forward to future years.
Residential Energy Efficient Property - If you placed things into service like photovoltaic cells, solar water heater, wind generators, geothermal heat pumps or fuel cells:
- The amount of your credit allowed is limited to the amount of your remaining liability after we have considered your residential energy property (doors, windows, etc.).
If the remaining tax liability is less than your credit amount, any amount not used to bring your tax liability down to zero, will be carried forward to the next year, as the energy credits are limited and the treatment has been adjusted a number of times since 2006 through tax law changes.
For more information, see the 2020 IRS Instructions for Form 5695.
@ben-hefferon
