Federal HVAC Tax credit and Federal Energy Efficient Tax Credit - where to file it?

[jtax88]

I installed a ductless mini-split heat pump/AC unit in 2021. It says I am eligible for a Federal HVAC tax credit  and a Federal Energy Efficient Tax Credit. 
https://powersaveac.com/blog/post/do-mini-splits-qualify-for-tax-credit

https://turbotax.intuit.com/tax-tips/home-ownership/energy-tax-credit-which-home-improvements-qualif...

Federal Energy Efficient Tax Credit

In late 2020, the Further Consolidated Appropriations Act, 2021 was passed and signed by the government. Under this act, if you bought or will buy a ductless mini split system before December 31st, 2021 and you’re a nonbusiness, then you could be eligible for a tax credit.

If your ductless mini split system was installed and running after December 31st, 2022 but before January 1st, 2024, you could get 22 percent off as a tax credit. If your system was installed and running after December 31st, 2019 but before January 1st, 2023, the tax credit is 26 percent.

For those homeowners with a ductless mini split system that was in service before or on December 31st 2019, you could get a 30 percent credit as well.

Federal HVAC Tax Credit

Another possible opportunity for a deduction is the Federal HVAC Tax Credit. This too was passed governmentally in late 2020. If a boiler or furnace qualifies, then you can receive a credit of up to $150.

For any ductless mini split system, packaged unit, heat pump, or central air conditioner that applies, the max credit is $300. You can also apply for credit between $50 and $300 for a specific amount or 10 percent of your mini split price with a max credit of $500.

Where do I put the info to get both credits?
Is it only on Form 5695 (Residential Energy Credits)? How do I see these specific %'s and credits?  Thanks.

[MinhT1]

To claim the Home Energy credits, please follow these steps:

1. In TurboTax, open your tax return
2. Click on Federal in the left-hand column, then on Deductions & Credits on top of the screen
3. Scroll down and locate the section Your Home and click on Show more
4. Click Start next to Home Energy Credits
5. Follow the interview to enter your information.

[jtax88]

@MinhT1 I went to the credits section, then Home Energy Credits (which ends up being the input for form 5695).

But I don't see the 26% calculation for the residential energy efficient prop credit. (I did find out that I don't qualify for the non-business energy prop credit because I had installed efficient windows in prior years, so I couldn't claim the $500 credit). How can I get the 26% tax credit for the Fed Energy Efficient Tax Credit?

Federal Energy Efficient Tax Credit

In late 2020, the Further Consolidated Appropriations Act, 2021 was passed and signed by the government. Under this act, if you bought or will buy a ductless mini split system before December 31st, 2021 and you’re a nonbusiness, then you could be eligible for a tax credit.

If your ductless mini split system was installed and running after December 31st, 2022 but before January 1st, 2024, you could get 22 percent off as a tax credit. If your system was installed and running after December 31st, 2019 but before January 1st, 2023, the tax credit is 26 percent.  @energy efficient property credit

[ColeenD3 · Accepted solution]

It's hiding under the category of  energy-efficient building property.

The IRS defines energy-efficient building property as:

• An electric heat pump water heater that yields an energy factor of at least 2.2 in the standard Department of Energy test procedure.
• An electric heat pump that achieves the highest efficiency tier established by the Consortium for Energy Efficiency (CEE) as in effect on January 1, 2009.
• A central air conditioner that achieves the highest efficiency tier that has been established by the CEE as in effect on January 1, 2009.
• A natural gas, propane, or oil water heater that has an energy factor of at least 0.82 or a thermal efficiency of at least 90%.
• An advanced main air circulating fan is an efficient fan, or blower motor which blows the air that your furnace heats up through the duct system and uses no more than 2% of the furnace’s total energy.
• A biomass fuel stove used to heat your home (or water for your home) that has a thermal efficiency rating of at least 75%. Wood and wood pellets are considered biomass. For 2021, the credit isn't capped and covers 26% of the full cost (purchase and installation).

You can get 10% of the cost of energy-efficient building property or $300 (whichever is less) as a tax credit.

[jtax88]

I did look under the Home Improvements section and put in the amount for the installation of a ductless mini split heat pump/AC unit to get the Federal Energy Efficient Tax Credit. But after entering it, it said my tax credit was zero! There was no calculation for the 26% credit or any indication there was a carryover for next year. I don't understand how this could be.  The TT help section stated:

Residential Energy Efficient Property 
- 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.

[JohnW152]

The fact that you’re seeing no credit and no carryover indicates that there must have been an input error somewhere along the way, which is certainly understandable since you appear to have been working through this for at least a couple of days.

If what you entered had indicated eligibility, then you would’ve seen either the credit or a carryover.

So, I’d suggest you go back through the interview process.  

To get back to the interview in TurboTax Online:

1. If you’re on the Hi TurboTax Client, let's keep working on your taxes! screen, click the Pick up where you left off button
2. Click Federal in the left pane, if you’re not already there
3. Click Deductions & Credits in the banner
4. Scroll down and click Show more to the right of Your Home
5. Click Revisit to the right of Home Energy Credits
6. Review all relevant information on the appropriate screens

To get back to the interview in TurboTax Desktop:

1. Select the Federal Taxes tab in the top banner, then select Deductions & Credits below that
2. On the How do you want to enter your deductions and credits? screen, select I’ll choose what I work on
3. On the Your 2021 Deductions & Credits screen, scroll down to Your Home
4. Beneath that, select Home Energy Credits
5. Review all relevant information on the appropriate screens

[SteamTrain]

Other than the one commercial URL you posted; I'm having problems finding any other Govt or Energy Star reference that included all ductless mini-spit systems as being eligible for the 26% credit.

(But perhaps someone else can find a 2nd/3rd reference that specifies that exact credit amount) 

______________________

Possible exception:  Does your ductless mini-split system include a "Geothermal"? or is it an Air-exchange-based heat pump?

IF yours has a geothermal heat pump, then your cost entries should (possibly)  be included in with the "Geothermal heat pump property" a couple pages after the Energy efficient building Property page.....on the page that has the Solar tax credits in it.  Several of those are 26%-ers, and if yours is a geothermal heat-pump based, ductless mini-split system, that  might/maybe be where you would enter yoru costs for that one.

_________________

Logically, I wouldn't think an air exchange heat pump system would be eligible. for the 26%..but that's just my opinion with no literature source to back it up........Other than the current official Energy Star web page:

Federal Tax Credits: Air Source Heat Pumps | ENERGY STAR

[jtax88]

Thank you for looking for the Energy tax urls.  It looks like my ductless mini split heat pump AC units doesn't qualify. I did have a certificate from the AHRI (Air conditioning, heating, and refrigeration institute) that stated my Daikin model  was Energy Star certified by AHRI and said it was eligible for a tax credit (it was updated 2/11/2022). But the Federal Energy Efficient Tax Credit for the 26% apparently did not apply. Oh well. Thanks again. Thank you all for helping me!
@SteamTrain @JohnW152 @ColeenD3 @MinhT1 

[LoadShow]

What about the federal law governing energy efficient HVAC units passed in June or July 2022?  My new unit was installed in July 2022. 

[leviton11]

I am having the same issue.  I enter all of the amounts and it says my credit is zero.  Why is this not being computed properly?

[leviton11]

As far as I know, the new legislation that was pass in 2022 (Inflation Reduction Act) take effect for the tax year 2023.  However, the energy tax credits that were set to expire at the end of tax year 2021 have been extended to the end of tax year 2022.  So what you purchase in 2022 will still be covered based on the same rules that were in effect for 2021.

[leviton11]

Update - actually I went back in and tried it again and I am now able to get the correct credits! 

[Opus 17]

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@LoadShow wrote:

What about the federal law governing energy efficient HVAC units passed in June or July 2022?  My new unit was installed in July 2022. 

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The changes only apply to items installed in 2023.  For an efficient air conditioner installed in 2022, the credit is 10% of the installed cost, with a maximum of $300, and a lifetime maximum on this credit type of $500, so if you took the credit before, you may no longer be eligible. 

Starting in 2023, the credit percentage is raised to 30% of the installed cost and the lifetime cap is removed, but if you installed an energy efficient improvement in 2022, you must follow the old law.

https://ttlc.intuit.com/community/tax-law-changes/discussion/faq-revisions-to-section-25c-energy-eff...

[Opus 17]

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@leviton11 wrote:

I am having the same issue.  I enter all of the amounts and it says my credit is zero.  Why is this not being computed properly?

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The changes only apply to items installed in 2023.  For an efficient air conditioner installed in 2022, the credit is 10% of the installed cost, with a maximum of $300, and a lifetime maximum on this credit type of $500, so if you took the credit before, you may no longer be eligible. 

Starting in 2023, the credit percentage is raised to 30% of the installed cost and the lifetime cap is removed, but if you installed an energy efficient improvement in 2022, you must follow the old law.

https://ttlc.intuit.com/community/tax-law-changes/discussion/faq-revisions-to-section-25c-energy-eff...

[Opus 17]

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@leviton11 wrote:

Update - actually I went back in and tried it again and I am now able to get the correct credits! 

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Some forms don't work right when Turbotax is first released, this is almost always the case.  It takes several rounds of program updates to get everything up to date and working correctly.