Form 5695 Biomass Stove not calculating as expected

[markscomputer]

Hi, I spent $5,100 in 2024 on a new wood stove that qualified for a form 5695 credit.  This was at my primary residence.  When I enter all the info and answer all the questions, turbo tax calculates my credit as $0.  Any ideas how to resolve this issue?

[Vanessa A]

Did you update your software if you are using TurboTax download?  If not, the program you are using may not be up to date with the forms and need updated to calculate the credit.

Do you have any tax liability?   The Residential Energy Credit is a non-refundable credit,  Look at line 16 on your 1040, then also look at line 24. If the amount on line 16 is less than the full credit, then this is the maximum amount of the credit you use this year will be that number.  If you have other credits, that may also reduce the tax liability, this may also reduce the amount of the credit you receive.  

Then look at line 24.  If this line is $0, then you received one of more credits that brought your taxes down to $0.  If this is the case, and you had multiple nonrefundable credits, you may not be able to claim the credit for your wood stove until a future year when you do have a tax liability.

If you are unable to use this credit in the year you install the equipment, this can be carried forward to future tax years until this credit goes away which is currently set to happen in 2034.

If you do have a tax liability on line 16, you can go back and double check the answers as you walked through the interview.  

In order to claim the credit you must

• Live in the home you installed the item in
• You must have purchased the equipment new, not used
• You can not rent this home to others if you do not also live in the home
• it must be your main home
• It must be in the United States
• You cannot use the property solely for business. 
  • If you use the home partially for business but less than 20% you can take the full credit.
  • If you use the home more than 20% but less than 100% for business, you can take a prorated credit.

[secane6-q]

I spent over $10,000 on the biomass stove and should get the max credit of $2,000. Turbo Tax only wants to give me $1,323. This is not fair and I don’t know what to do. 

[BrittanyS]

Your credit of $1,323 could be due to this being a non-refundable tax credit.  This means that it will only reduce your tax liability by the amount you owe.  Any qualified improvements can be made through 2033.   Vanessa A provided great steps to check your return.  I have included the steps here for easy review, "If you do have a tax liability on line 16, you can go back and double check the answers as you walked through the interview.  

In order to claim the credit you must

• Live in the home you installed the item in
• You must have purchased the equipment new, not used
• You can not rent this home to others if you do not also live in the home
• it must be your main home
• It must be in the United States
• You cannot use the property solely for business. 
  • If you use the home partially for business but less than 20% you can take the full credit.
  • If you use the home more than 20% but less than 100% for business, you can take a prorated credit."

[Edited 03/03/2025 | 7:58 am PST]

@secane6-q 

[secane6-q]

Thank you, Brittany, I think I understand it now, why I’m not getting the entire $2,000. Do you know if Turbo tax will forward the remaining $677 of the credit to my taxes for 2025? Or do I have to do something to make sure of it? 

[BrittanyS]

The carryforward is available for the Home Energy Credit.  After further review, the biomass stove falls under the home improvement credit.  Per the IRS, "The credit is nonrefundable, so you can't get back more on the credit than you owe in taxes. You can't apply any excess credit to future tax years."  Since the biomass does not fall under the home energy credit and is considered a home improvement, it does not qualify for the carryforward.  However, any additional improvements can still qualify if they occur in a new tax year.  See the link below for additional information:

• Home Improvement Tax Credit

@secane6-q 
 

[secane6-q]

I understand it now. Do you know of Tirbo Tax will automatically forward the remaining of my Residential Energy Credit to my 2025 taxes? Or do I need to do something? 

[secane6-q]

This says there is no lifetime limit on the biomass stove. I still think it should be allowed to carry forward. The biomass stove is listed under “Residential Energy Credit,” not “Home Improvements” I am so confused. Getting $2000 back was a big incentive to buy such an expensive item! 

[RobertB4444]

They are correct that there is no lifetime limit.  That means that you can buy another one.

Unfortunately @BrittanyS is correct - the Biomass stove credit is limited to only the year in which you make the purchase and only up to your total tax liability or $2000.  In your case because you didn't owe more than $2000 in taxes this year you did not get the full benefit of the tax credit.

@secane6-q