topic Why does my hot water heater replace in 2025 not qualify for tax credit? in Deductions & credits

Why does my hot water heater replace in 2025 not qualify for tax credit?

rgorgone — Sun, 01 Mar 2026 06:56:56 GMT

QMID is S6A2 Cost was $6220

Re: Why does my hot water heater replace in 2025 not qualify for tax credit?

Vanessa A — Sun, 01 Mar 2026 14:13:45 GMT

After you enter everything and it tells you that it does not qualify, what is the message it is giving you?

Do you have enough tax liability to claim the credit? The water heater is part of the Energy Efficient Home Improvement Credit. This is a nonrefundable credit that cannot be carried forward. Which means it is a use it or lose it credit. So if you do not have a tax liability in the tax year you are filing for on line 16 of your form 1040 for it to offset, or you already have enough other non-refundable credits to offset it, you will not be able to claim this credit.

Re: Why does my hot water heater replace in 2025 not qualify for tax credit?

rgorgone — Tue, 03 Mar 2026 19:35:19 GMT

I changed what needed to be changed to allow completion of the return. TurboTax accepted the federal and state return. Said everything looked good. Then when Turbo Tax submitted the federal and state returns, both were rejected. I received an email that stated there was a processing error and I had to wait until March 6 to fix??? I am confused and don't know what to do now? Sure wish one of the tax pros would contact me directly and explain what the issue is and what I need to do to have the returns submitted and accepted.

Re: Why does my hot water heater replace in 2025 not qualify for tax credit?

Vanessa A — Tue, 03 Mar 2026 19:41:16 GMT

The IRS has issued a correction to the 2025 Instructions on their end.

We have corrected the calculation for joint occupants of a home who are claiming the energy efficient home improvement credit in Part II of the 2025 Form 5669. Please refer to the instructions below with respect to the joint occupancy section on page 3 of the 2025 Instructions for Form 5695. If you downloaded or printed the 2025 Instructions for Form 5695 prior to Jan. 26, 2026, please note the correction.

Although, the IRS is saying March 6, if this is the date that they will have the forms corrected, TurboTax software will take a little bit to then make the changes. You can attempt to refile on the 6th or wait for several days after that.. There is nothing at this point that can be done since it is an IRS issue.

Re: Why does my hot water heater replace in 2025 not qualify for tax credit?

user17725688608 — Tue, 03 Mar 2026 20:25:10 GMT

I'm having the same problem and same error. My wife and I file joint so the living together question comes up (its our one and only residence and home and we both live here). Turbotax gave the credit 2 weeks ago. Last week after an update it removed the credit. If I pretend I bought a heat pump (same legislative credit) it takes it. Move it two lines down to hot water heat pump and it changes the answer to "Based on what you've entered so far, we can't get you the home energy credit for 2025 and you have no credit to carry forward to 2026."

I'm positive I qualify for the credit. I'm positive it was installed in 2025. I have the QMID. Again, it listed the credit in the proper space two weeks ago. I never went back to that section. I updated the software at launch and it sent my numbers sideways, which I tracked to this credit disappearing.

The belief is this weeks update will fix it? My concern with pinning this on an IRS and not Turbotax error is two weeks ago it was fine.

Re: Why does my hot water heater replace in 2025 not qualify for tax credit?

Vanessa A — Wed, 04 Mar 2026 14:13:08 GMT

The reason it is likely the IRS issue, is it was working prior to the IRS update notification. So at this point since the IRS is updating calculations, which is integral to the form, calculations cannot be guaranteed as accurate when we do not know what the IRS is changing it to exactly. The forms cannot be submitted currently, the IRS is rejecting returns with these forms attached and the calculations may be different when the IRS is all said and done.

But as stated, it is an open investigation meaning, the non programmers have asked the programmers what is happening and we are waiting to hear back.