I'm trying to get the $2000 tax credit for the heat pump water heater. But I do not see an option for that. I looked through all the Energy saving section.

[LindaS5247]

In TurboTax, open your tax return

• Click on Federal in the left-hand column, then on Deductions & Credits on top of the screen
• Scroll down to All Tax breaks, locate the section Your Home and click on Show more

The deduction for a heat pump must meet specific qualifications and is taken on Form 5965.

Heat pumps and biomass stoves and boilers with a thermal efficiency rating of at least 75% qualify for a credit up to $2,000 per year. Costs may include labor for installation.

Form 5695 (Residential Energy Credits) is used to calculate tax credits for energy efficient improvements and alternative energy equipment.

To add or remove this form:

1. Open or continue your return
2. Inside TurboTax, search for this exact phrase including the comma and spaces: 5695, residential energy credit
3. Select the Jump to link in your search results
4. At the bottom of the Energy-Saving Home Improvements screen, answer Yes, then select Continue
   • To delete the 5695, answer No, select Continue, and then answer Yes on the following screen to confirm the deletion
5. Follow the instructions to enter your energy-saving improvement costs

The IRS offers several ways for taxpayers to cut their tax bills through investing in certain energy-efficient appliances and home improvements. This can include upgrades like energy-efficient water heaters, furnaces, air conditioners, windows, doors and similar investments, but also clean vehicles and related equipment.

Installing alternative energy equipment in your home such as solar panels, heat pumps, windows, doors and roofing can qualify you for a credit up to 30% of your total cost. 

1. Energy-Efficient Home Improvement Credit

Recently renamed from the Nonbusiness Energy Property Credit, this tax credit originally expired at the end of 2021. The Inflation Reduction Act changed the fate of this credit by not only reinstating it, but substantially expanding the impact starting in 2023 through 2032.

The old rules apply for 2022, essentially extending the previous credit by one year. Afterwards, the credit for the costs of installing certain energy-efficient upgrades such as home insulation, windows, doors, roofing, and more increases from 10% to 30%.

 It will also be expanded to cover certain types of stoves, boilers, electric panels, and other related equipment with a greater set of limits (up to $1,200 per year vs. the previous $500 lifetime limit). If you can manage to spread your qualifying home improvement projects throughout the credit’s current, upgraded availability (through December 31, 2032), you could net up to $12,000 in tax credit value over ten years through the Energy Efficient Home Improvement Credit.

The annual limits on the credit for specific types of qualifying home improvements will be enhanced starting in 2023 as well. Specifically, credit limits will be the following:

• Home energy audits: $150
• Exterior doors: $250 per door (up to $500 per year)
• Exterior windows and skylights, central A/C units, electric panels and related equipment, natural gas, propane and oil water heaters, furnaces or hot water boilers: $600
• Heat pumps and biomass stoves and boilers: $2,000 (this one category qualifies to go above the $1,200 annual limit)

If you meet the criteria of an energy tax credit covered above, you generally can claim the credit on your return subject to certain limitations.

 Tax credits reduce the amount of taxes you owe dollar-for-dollar. For example, if you owe $1,000 in federal taxes but are eligible to claim a $1,000 tax credit, your net tax liability drops to zero. These energy credits are non-refundable credits meaning that they can lower your taxes but won’t result in a refund.  

You may have the opportunity to roll over unused portions of tax credits to future years, allowing you to claim their full value down the road when you have additional tax liability.

How do you claim energy efficient tax credits on your tax return?

To claim the credits, you'll need IRS Form 5695.

Click here for additional IRS information regarding Energy Efficient Home Improvement Credit.

Click here for additional information on Energy Saving Credits.

Click here for "What is IRS Form 5965?"

[mgibbons51]

I see many of the options but non mention a heat pump water heater for me. I see the biomass, furnaces etc. But no heat pump water heater. 

[rjs · Accepted solution]

@mgibbons51  The energy credits section of TurboTax has not yet been updated for 2023. Form 5695 is tentatively expected to be available February 1. (That date could change.) Try entering the credit again after February 1.

[dmoyer89]

Thank you for this reply.  I also had the same problem yesterday 1/28, and could not find how to claim the $2000 heat pump credit, or anything else under the new $1200 limit.  The credit maxed out at $500, which I think is the old limit.  Is there any way we can follow along to know when the updated 5695 form is available, or do we just have to keep coming back and trying to enter data?

Edit - Answering my own question. These new credits are discussed on this post: https://ttlc.intuit.com/community/taxes/discussion/faq-revisions-to-section-25c-energy-efficient-hom...

And there is link where you can check tax form availability here. Now it's saying that form 5695 isn't tentatively ready until 2/7/24.  https://form-status.app.intuit.com/tax-forms-availability/formsavailability?albRedirect=true&product...

[silversubaru23]

Hi.  This form seems to be extending out one week at a time.  Last i saw its now 2/7/24.  Any ideas when it will REALLY be available?  This is the last thing i'm waiting on and would really like to claim my $2000 credit.  

[arrainey31]

I agree.  Last week it said the form would be available 1/31.  Today it says it is not available until 2/7.  They should have notified people of the extension or gotten their act together.  I need that form and nothing I need for it has even changed.  

[dmoyer89]

From what I've gathered, this delay is actually coming from the IRS not having the instructions ready for Form 5695.  The instructions are still in a "draft" status > https://www.irs.gov/pub/irs-dft/i5695--dft.pdf

I thought I might try using different tax software, but according to other discussions on Reddit, no one has had success with other tax filing services either because they are all waiting on the IRS to finalize these instructions.  I have not read anywhere yet that provides an estimate from the IRS as to when they expect it to be finalized.

[arrainey31]

Our fine government at work.  The form is ready and people who don't need the instructions are stuck in limbo with getting refunds because the IRS can't get their act together.  They should not even be this far into the year with getting those instructions ready.  We are waiting on some bureaucrat to take the time to look at it and approve it.

[dmoyer89]

Good news.  I checked IRS.gov/LatestForms and it shows that as of yesterday 1/31/24, a finalized version of "Instructions for Form 5695" has been published for 2023.  My understanding is that the ball will now be in Turbo Tax's court to incorporate these instructions into their software and test it. Hopefully this process is quick!

[chrisingrassia]

I'm glad I came across this thread. We did exterior windows last year and should be seeing a $600 credit, but it consistently keeps only coming up as $200. I had a feeling something wasn't right about that and then came across this here with the form 5695 issue.

However, we are getting refunds of about $14200 combined for 2023. Would it behoove me to roll the $600 credit to 2024 or is that disallowed? I didn't work at all last year so our income was lower; I have a job pending for 2024 so I'm sure our tax liability is going to change and increase so the credit might be more useful in 2024?

[michaelkamen-com]

Thanks to all who have shared your experiences and insights.  Turbotax clearly has a role to play in keeping we users informed about situations such as this.  No doubt the delays within the IRS are due to budget cuts and resulting inadequate manpower.  But Turbotax simply provided the product using the old rules with no message to alert the user of the need to wait.  This, I cannot find a way to understand.

[sophicwife]

The form is available on irs.gov: 2023 Form 5695 (irs.gov)

Honestly, if I had known Turbo Tax was going to be so slow on this, I would have paid a professional a little more to do my taxes. Can I get a refund?

[DoninGA]

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@sophicwife wrote:

The form is available on irs.gov: 2023 Form 5695 (irs.gov)

Honestly, if I had known Turbo Tax was going to be so slow on this, I would have paid a professional a little more to do my taxes. Can I get a refund?

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The IRS Just finalized the Form 5695  instructions for tax year 2023 yesterday, 01/31.  It will take awhile before those updated instructions are entered into the software.  No reputable tax preparation software provider will have the form 5695 ready to file today.

The Form 5695 Residential Energy Credits for tax year 2023 has not yet been finalized in TurboTax.

The Form 5695 is scheduled to be available in TurboTax on 02/07/2024 (subject to change).

Go to his TurboTax website for forms availability - https://form-status.app.intuit.com/tax-forms-availability/formsavailability?albRedirect=true&product...

[michaelkamen-com]

Hi, so. . . when Turbotax is corrected Feb 7, or whenever, Will I need to re-download it to my desktop?  I purchased it on Amazon.  Or will it be updated immediately on opening the software?