How can I claim residential energy credits for electric heat pumps and heat pump water heaters?

[CEAW]

I qualify for this credit. I enter my info correctly and the software says there's no credit or carryover. I've tried every line on the residential energy property page and none of them work. If I put the cost on the residential clean energy page, I get a credit. So I've obviously answered the questions correctly. What gives. I'm using the online TT.

[Colorado Kid]

There are two different types of credit on Form 5695. The "Residential Clean Energy Credit" is for things like solar panels or geothermal heat pumps.  The "Energy Efficient Improvement Credit" is for things like windows, furnace, water heaters, etc.  Make sure you are entering the correct item under the correct section.

[MonikaK1]

Enter your information for the 2023 Residential Clean Energy Credit and the Energy Efficient Home Improvement Credit like this, in TurboTax Online:

1. Open or continue your return, if you don't already have it open.
2. Select the Deductions & Credits tab.
3. Find the Your Home section.
4. Select the Start/Revisit button for Home Energy Credits.
5. On the Energy-Saving Home Improvements screen, answer Yes and Continue. Follow the instructions on the next screens.
   • The first part of the interview covers improvements like doors, windows, furnace, air conditioning, and heat pumps. If you're looking for other improvements like solar, geothermal, wind, and fuel cell, just keep going and TurboTax will ask about those as well.

See the IRS Instructions for Form 5695, this TurboTax tips article and this TurboTax help article for more information and useful links. As @Colorado Kid stated, make sure you are entering the information in the correct section. You might want to go through the entire Home Energy Credits interview again to be certain.

There are times when you can't take a credit into the current year, including:

• Your income is at a level that's not taxed at all.
• You're getting other tax credits that have reduced your tax owed to zero.

If your credit can be carried forward to next year, we'll do that for you.

@CEAW 

[foh24]

Furnace (propane) is listed on the first page for qualifying home improvements as you show here, but as you progress through to fill in your totals for the various items, furnace is no where to be found- only heat pumps and water heaters.

[DoninGA]

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@foh24 wrote:

Furnace (propane) is listed on the first page for qualifying home improvements as you show here, but as you progress through to fill in your totals for the various items, furnace is no where to be found- only heat pumps and water heaters.

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On the page Enter Your Qualified Energy Costs use the box labeled Water boilers for the cost of the furnace.  The box needs to be re-labeled.  If you click on the Learn More link it will describe -

Enter the amounts you paid for a natural gas, propane, or oil furnace or hot water boilers...

That is the correct location to enter the furnace cost as it will flow to the Form 5695 Line 24a for Enter the cost of natural gas, propane, or oil furnace or hot water boilers

[foh24]

this worked to get it filled in under credits and deductions (thank you.) However, now, at the end where i review my return it says my total credits is only 4,000 (2 children) instead of 4,600 (2  children + 600 from furnace). this is despite it showing correctly in that credit and deductions section.  Any ideas?

[DoninGA]

@foh24 If your tax liability on the Form 1040 Line 18 has been reduced to 0, then the Energy Credit cannot be used on the 2023 tax return and it will not be carried forward to the next year.

[foh24]

Hmm, thanks. Is there a way to see the actual form while I'm mid-filing in turbo tax? I was referencing the summary/review.

[DoninGA]

@foh24 If you are using the TurboTax online web-based editions -

You can view your Form 1040 at any time using the online editions. Click on Tax Tools on the left side of the online program screen. Click on Tools. Click on View Tax Summary. Click on Preview my 1040 on the left side of the screen.

[foh24]

found it. it appears the credit was in fact applied when looking at my 1040 and being able to see the itemized credits vs tax, it all looks fine. the summary just was not showing the 600 (4600) despite it being on my 1040. thanks for your help.

edit> yeah the 600 missing is also apparent when following the guidance regarding the refund total (This is calculated by taking your total taxes paid and subtracting your tax liability.) When I do that based on the summary values, it comes up 600 short of the value displayed. so there's a bug on that step/view.

[Lam1111]

Today is February 17 and the form 5695 is still not available in turbo tax!

[DoninGA]

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@Lam1111 wrote:

Today is February 17 and the form 5695 is still not available in turbo tax!

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Did you update your TurboTax desktop software to the latest release?  The Form 5695 for tax year 2023 was available on 02/08.

Click on Online at the top of the desktop program screen.  Click on Check for Updates.

[MonikaK1]

Form 5695 is now available, as @DoninGA noted. 

If you're on a PC using TurboTax Online, open TurboTax and select Check for Updates from the Online menu near the top. On a Mac, quit and reopen TurboTax. If there are any updates, you'll be prompted to download them.

Tips:

• It's best to use a wired, high-speed connection when updating, both to save time and minimize data corruption.
• If your connection drops in the middle of the update, try again; it should pick up where it left off.
• If you're having trouble updating on your PC, try a manual update.

 You can try manually updating TurboTax Online as explained in this help article:

If you're having trouble updating your TurboTax 2023 for Windows Individual software using the "Check for Updates" method, here are instructions for how you can get the latest federal program update:

1. Close TurboTax and all other programs except this browser window.
2. Select this link to download the 264 MB update.
3. Save the update file to your Windows desktop.
4. Double-click the update file w_perrelsuperpatch... on your desktop to install the manual update.

Logging out of TurboTax and back in, changing browsers, or clearing your cache and cookies often helps. 

@Lam1111 

[CinTexas]

We replaced our AC with a heat pump + air handler, what value do we enter for the "qualified energy property costs"?, the total amount we were charged, or just the cost of the heat pump?

[Vanessa A]

You would enter the cost of the heat pump+ air handler and the labor for the heat pump installation.  The air handler is the indoor part of your heat pump system.  This credit is 30% of the cost, but is limited to $2,000.  

The Home Improvement Energy Efficient Credit is a non-refundable credit

• Worth up to 30% of costs with a maximum credit $2,000 for
  • Air source heat pumps
  • Heat Pump Water Heaters
  • Biomass Stoves or Boilers
• Worth up to 30% of qualifying costs for a maximum combined total of $1,200 for the following:
  • Doors, Windows and Skylights
  • Insulation
  • Natural Gas, Oil Propane Water Heaters
  • Furnaces
  • Boilers
  • Central Air Conditioners ($600 maximum Credit)
  • Electrical Panel Upgrades
  • Home Energy Audit (up to $150)
• You can combine the $2,000 credit with the $1,200 credit for a total of $3,200
• This credit is a use it or lose it credit.  If you do have enough tax liability in the year you buy and install the item, you will not be able to carry the credit forward.
• NOT available for new construction.