The information below should help you with the adding of your heat pump on your taxes. Please let me know if you have any other questions.
Your heat pump may qualify for a federal tax credit if it meets certain energy-efficiency criteria. Click the Energy efficient heating, cooling, or ventilation systems link in the FAQ below for specifics. (Note: If this is a geothermal heat pump, click the Geothermal heat pumps link.)
To enter your energy-efficient heat pump in TurboTax:
- Open (continue) your return in TurboTax Online.
- Click My Account (top right of your screen).
- Select Tools.
- In the pop-up window, select Topic Search.
- In the search bar, type 5695.
- In the results box, highlight 5695, residential energy credit, then click GO.
- Follow the onscreen instructions to complete this section. You'll enter the cost of your heat pump as an Energy Efficient Building Property. (Click the screenshot below for reference.) After you enter the cost of your heat pump and answer the corresponding questions, TurboTax will determine if you qualify for an energy credit. (Note: If you installed a geothermal heat pump, you'll enter this information on a different screen. Just answer the interview questions as they apply to your situation.)
Note: If using the TurboTax CD/Download software, you'll use the Find function (instead of "My Account") to search for the topic.
The Nonbusiness Energy Property Credit has a lifetime total combined limit of $500, so if you have claimed the credit in a prior year your 2016 deduction may be reduced. See IRS Instructions for Form 5695, Residential Energy Credits for more information. (Note: The Residential Energy Efficient Property Credit that applies to a geothermal heat pump is a different credit, which is also discussed in the Instructions for Form 5695.)
Federal Tax Credits for Qualified Energy-Saving Home Improvements
You can't claim Energy Star appliances or water-saving improvements like low-flow toilets, low-flow showerheads, or xeriscaping on your federal return.
But you can get a federal tax credit for qualified energy-saving home improvements, like:
- Energy-efficient windows, doors, and skylights
- Solar water heaters
- Non-solar water heaters
- Roofing products
- Biomass stoves
- Energy-efficient heating, ventilating, or cooling systems
- Geothermal heat pumps
- Wind turbines
- Solar energy systems
- Fuel cells
Tip: Many state governments, local municipalities, and utility companies offer incentives for energy- or water-saving home improvements that are not tax-related. An online search will reveal what your state has to offer (for example, you might search for Colorado water rebate or Kentucky energy incentive).