Why is home energy credit on my draft 2023 federal return limited to $500? Per IRS website, 2023 maximum limit is $1,200. When will updates be made?

[Bsch4477]

https://form-status.app.intuit.com/tax-forms-availability/formsavailability?albRedirect=true&product...

[SusanY1]

While we the forms are not yet finalized by the IRS and TurboTax, most of the calculations are working.  While the overall limit is $1200, certain items (such as doors), have a lower limit of $250 per door with a maximum total of $500.  The limit you're seeing could be correct depending on the information provided to the program.  If you are entering other types of property (such as a furnace) then it may be that the data isn't fully populating due to the forms not being fully ready. 

You can find more information about the particular limitations of the credit HERE.  If you are entering data for items that do have a limit above $500, please do check the link provided above by @Bsch4477 to learn when the forms are expected to be fully functional in the program and try again after that date.  

[EP27]

Hello Susan, can you help me prepare for when the Form 5695 is ready late January? I'm not 100% clear on carryforward options if I can't get the full credit in Year 1 (2023).  First, I'll share below what I installed/spent in 2023.  Then I will paste the copy from the IRS link you shared.

My primary home, I did the following:

1 exterior door: $500

4 skylights: Total price for all was $3900

2 heat pumps (minisplits) for home heat: Price after rebate was $6500

1 Electric Heat Pump Water heater: Price after rebates was $3500

Rooftop solar (electric) PV panels: $21,500

IRS INFO: 

The maximum credit you can claim each year is:

• $1,200 for energy property costs and certain energy efficient home improvements, with limits on doors ($250 per door and $500 total), windows ($600) and home energy audits ($150)
• $2,000 per year for qualified heat pumps, biomass stoves or biomass boilers

The credit has no lifetime dollar limit. You can claim the maximum annual credit every year that you make eligible improvements until 2033. 

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.

So my question is.....does the text "you can't apply any excess credit to future tax years" mean that I'm only able to claim $2000 total (lifetime) for the $10k I spent on the heat pumps and water heater, and $1200 total for the door and skylights?   If so, what is the incentive to "go electric" quickly if it's better to do one small install per year for a better tax credit?   Thank you in advance!

[LindaS5247]

May a taxpayer carry forward unused credits to another tax year? 

Per IRS guidance, the Energy Efficient Home Improvement Credit may not be carried forward, but the Residential Clean Energy Credit may be carried forward.

May a Taxpayer carry forward credit to another tax year?

The rules vary by credit.

• Under the Energy Efficient Home Improvement Credit: a taxpayer may not carry the credit forward. Thus, if a taxpayer does not have sufficient tax liability to claim all or a portion of the credit in the year in which the related property for which the qualifying expenditure is placed in service, the unused amount of the credit may never be claimed.
   
• Under the Residential Clean Energy Property Credit: a taxpayer may carry forward the unused amount of the credit to reduce tax liability in future tax years.

Click here for IRS information on energy credits.

Click here for additional IRS information on energy-efficient home improvements.
 

[JTTT12345]

The energy tax credits are not calculating properly for electric heat pumps.  Per the IRS it is a 30% credit up to 2k.  https://www.irs.gov/pub/irs-pdf/p5886a.pdf    Turbo tax support said i have to do tax advising which costs money..  it seems like its pretty clearly wrong in the turbo tax site.  Its bucketed under building which is capping out at 10% or $300.   Will this be corrected?  Pretty big miss.

Its also missing a spot for home energy assessment credits.

[lambertwei]

I agree with this comment. The software is not allowing me to take up 30% tax credit/2000 max for the central heat pump.

[DoninGA]

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@lambertwei wrote:

I agree with this comment. The software is not allowing me to take up 30% tax credit/2000 max for the central heat pump.

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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...

[B42L82]

I just ran into the same issue.  We know we'll be receiving a $600 credit for our A/C unit and a separate $600 credit for the furnace that, fortunately, died in 2023 to qualify for the newest home energy credits. 

TurboTax is indicating our credit is $200, which is $1000 less than we know we're entitled to receive. 

Please have the software updated to remove the prior credit limitations and add the information that was already commonly known in Spring 2023 about the home energy credit structure.   

Thank you!

[DoninGA]

@B42L82 

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...

[mhaanraadts]

Same problem here. Only getting $200 out of $600 (windows). Will the finalized form to be released later this month fix this?

[AnnetteB6]

There is no way to know with certainty that everything will be exactly correct once the forms have been released, but that is certainly the intent. 

It takes time to update the TurboTax program to conform to tax law changes.  It is a multi-step process involving waiting for the IRS to release their final versions and waiting for IRS approval of the TurboTax versions.

To stay informed about potential dates for forms availability, use the link in the following TurboTax help article:

When will my individual tax forms be available in TurboTax?

@mhaanraadts 
 

[DoninGA]

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@mhaanraadts wrote:

Same problem here. Only getting $200 out of $600 (windows). Will the finalized form to be released later this month fix this?

---

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...

[JTTT12345]

 I got an email that this form was ready...  yet it still doesn't work

[jessica8926]

AGREED! I spent 4,540 on new exterior windows, which when 30% calculated is well above the $600 limit. So I expected to see I would receive $600 instead the form is still telling me $200....unless I am missing something I think the form is still not ready.