Does Aeroseal A/C duct sealing qualify for a tax credit under the Biden Energy Savings Law?

[Opus 17]

Yes, however,

1. Turbotax has not updated form 5695 to the 2023 version yet to enter the credit.  That is expected around January 10.

2. Labor is not allowed, only the cost of the product.  You must make a "reasonable allocation" of the cost between labor and product and only claim for the product.

https://www.irs.gov/credits-deductions/frequently-asked-questions-about-energy-efficient-home-improv...

[K B1]

"Reasonable allocation" is the problem.  I found one company that stated the average cost of product for Aeroseal is 35% of the total cost of the service. (Then you would calculate 30% of that figure). This calculation needs to be standardized for the Aeroseal system.  Would be nice if the parent Aeroseal company would update their website to confirm.  I have a call in to the company that did our seal.  Their answer will be interesting. So much time spent for this small tax credit calculation. 

[K B1]

As an update to what I posted earlier, I contacted the company that did our Aeroseal and they sent me the documents and told me that the entire Aeroseal process could be deducted.  Until the Instructions for Form 5695 give more specific guidance, this will continue to be a gray area.  I was also given advice by the other company to simply send the info to my CPA who "will know how to handle it".  Yeah sure. 

[Opus 17]

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@K B1 wrote:

As an update to what I posted earlier, I contacted the company that did our Aeroseal and they sent me the documents and told me that the entire Aeroseal process could be deducted.  Until the Instructions for Form 5695 give more specific guidance, this will continue to be a gray area.  I was also given advice by the other company to simply send the info to my CPA who "will know how to handle it".  Yeah sure. 

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I would not trust a heating contractor to prepare my taxes, I'm glad you have confidence in yours. 

The instructions for line 18a are quite clear.

Don't include on lines 18a, 19a, 19c, and 20a any amounts paid for the onsite preparation, assembly, or original installation of the components.

Line 18a.

Enter the amounts you paid for any insulation material or air sealing material or system (including any vapor retarder or seal to limit infiltration) that is specifically and primarily designed to reduce the heat loss or gain of your home when installed in or on such home and meets the criteria established by the IECC.

https://www.irs.gov/instructions/i5695

[K B1]

"Don't include on lines 18a, 19a, 19c, and 20a any amounts paid for the onsite preparation, assembly, or original installation of the components."   Not perfectly clear since there is a big difference between actual insulation in an attic and the Aeroseal process of sealing the ductwork from inside.   Also, I couldn't get either company to itemize a cost of materials or tell me what percentage of the cost of the actual liquid used in Aeroseal as opposed to any other parts of the service.   Technically there is no amount that was paid for any prep, no assembly, and no original installation since they only provide one price. Would the IRS themselves be able to answer this question with any accuracy?  Do CPAs have a reference for this or would they just ask the taxpayer to give them the amount...washing their hand of the specifics?  Opus 17, what would you do in this situation and are you familiar with Aeroseal?   Thanks.