Residential Clean Energy Credit carryforward and form 5695 for 2024 and 2025.

[NMPaul]

I submitted form 5695 via TurboTax in March 2024. I just discovered (in Feb 2025)  that boxes 17a thru 17c were checked incorrectly, saying that the property was not in the USA, which it is. Today, Feb 17, 2025 I have completed my tax return. I have a tax due amount of around $700. I also have a RCEC carryforward from 2024 of $26,000 or so. TurboTax says it cannot apply my carryforward credit to my tax owed for 2025. Why? Is there a link to the incorrect lines 17a thru17c on form 5695 from last year?   I tried to resubmit my 2024 return with a corrected 5695, but I cannot correct it. I had entered information correctly on TurboTax but TurboTax had checked the wrong boxes on form 5695. My immediate problem: how do I get to apply my RCEC carryforward to my tax bill for 2025? My second problem, how to correct my 2024 form 5695? Thank you.

[ThomasM125]

You likely can't apply the carryover credit from 2024 since the Form 5695 for that year was not correct.

When you go through the Home Energy Credits section under Your Home in the Deductions and Credits section of TurboTax, you will see an option to enter your energy credit carryover from the previous year. It is on the screen that says Home Energy Credit Carryforward. When you enter the carryover credit, that should allow you to get credit for the carryover from 2024 on your 2025 tax return.

You need to amend your 2024 return to record the correct energy credit and carryforward. You will see an option for that on your home screen when you log into TurboTax.

To populate lines 17(a) to 17(c) on Form 5695, you need to check the appropriate boxes in the Energy Efficiency Home Improvement Credit Smart Worksheet - Part II Section A you will see above the lines 17(a) to 17(c) on form 5695. Also, below those lines you must complete the Qualified Energy Efficiency Improvements Smart Worksheet. Lines 17(a) to 17(c) will populate based on those entries. 

[NMPaul]

Thank you. Regarding getting the credit for the carryover form 2024 on my 2025 tax return. I had already done as you suggest, that is enter the carryforward amount from the form 5695.  Although telling me that my running tax payable total is around $600, it gives me the following message: 

Your home energy credit summary

Based on what you've entered so far, we can't get you the home energy credit for 2025. However, $25,687 of your credit will be carried forward to 2026.

I want to use the credit for  2025. So I am stuck at that point. Can you explain why?

[NMPaul]

Thank you for your advice regarding my  need to amend my 2024 return to record the correct energy credit and carryforward. I prepared an ammended 2024 tax return as you suggest.

I had already done as you suggest, but did it again (twice) to check. I did check the appropriate boxes in the Energy Efficiency Home Improvement Credit Smart Worksheet - Part II Section A above the lines 17(a) to 17(c) on form 5695. I also completes the Qualified Energy Efficiency Improvements Smart Worksheet.

However, the outcome was as before. Lines 17(a) to 17(c) will populated incorrectly, saying that our house was not in the United States. I am completely stumped. I guess I will have to complete from 5695 by hand and mail it to IRS since TurboTax does not appear to be up to the job.

[RobertB4444]

Your credit is not applying because it is a non-refundable credit.  That means that it can only reduce your tax to zero.  Once it has done that the rest gets carried forward into the next year.  

In your case the tax bill that you had was around $700.  Once it reduces that to zero the rest gets moved into next year.  It can't be added to your refund.  

[NMPaul]

One of my original questions was how to get TurboTax to complete form 5695 correctly for my 2024 tax return. Although I had completed worksheets correctly, TurboTax had put check marks against the “No” boxes on lines 17a, 17b, and 17c, when it should checked the “Yes boxes”. The simple solution to this was click on the “Forms” tab at the top of the screen, scroll down to Form 5695, and amend the form directly. The reprinted tax return is now good. Thank you for all of your help on this.

[Unionsparky]

I have the same issue with carryover from 2023. went back through T/T files and looked at 5695 and none of 17a-17d were filled out by software and carryover went through with NO issues until 2025 Descktop has disallowed carryove. T/T calculated and listed correct carryove for the previos years. I spent several hours on T/T support and they said it could be because credit ran out. I show $7011 carryover remaining ???

Doesn't make sense

[NMPaul]

The second of my questions was why my owed Federal Tax would not reduce to zero given that I have plenty of credits from last year. The answer turns out to be that the Federal Tax owed was due to my self-employment tax. Apparently this is calculated after the credits have been applied, and so has to be paid. Credits were applied to taxes incurred from capital gains. It would be nice if TurboTax could have explained that to me at some point during the form completion process.