Why?? "We adjusted the Energy Efficient Home Improvement Credit you claimed on Form 5695, Residential Energy Credits."

[gsprattling]

It says "You either calculated the credit incorrectly or indicated you were ineligible for a credit." Instead of a $8443 refund, the cut $2000 to a $6443 refund.

[HollyP]

If you filed between January 28 and April 1 we’ve identified that some QMIDs weren't transmitted correctly. If you received an IRS notice (such as Letter 12C) stating that your Form 5695 (Residential Energy Credits) is missing a Qualified Manufacturer Identification Number (QMID), you can print a corrected Form 5695 from your TurboTax account and use it to respond to the notice. Responding with the corrected Form 5695 is the best way to move your credit forward. 

How do I get a PDF of my return?

[gsprattling]

My notice didn't mention anything about a QMID.

Is stated:

We adjusted the Energy Efficient Home Improvement Credit you claimed on Form 5695, Residential Energy Credits.  You either calculated the credit incorrectly or indicated you were ineligible for a credit.

I can only view the printed version of the Form for accuracy.  I have no idea what other settings were submitted to the IRS during the E-File that would cause it to be "ineligible".

[HollyP]

Can you clarify if boxes 17a-17c  and 17e of Form 5695 are checked yes or no? 

[gsprattling]

17a-c and 17e are all marked "No".

Keeping in mind that Electric Heat Pumps aren't considered part of the Section A portion of the form.

Electric Heat Pumps are part of Section B, and 21a-b are marked "Yes".

The question related to improvements to Panelboards, subpanelboards, circuits... 25a is neither marked Yes or No, just blank.

The question related to a Home Energy Audit being done, 26a is marked "No".

[HollyP · Accepted solution]

Thanks for that additional information. It sounds like you originally received the maximum Energy Efficient Home Credit in the amount of $2,000 for your electric heat pump, and the IRS has adjusted your credit to zero. (Form 5695, line 29h)

This nonrefundable credit covers 30% of costs, up to $2,000 for specialty upgrades like electrical heat pumps. To qualify, the upgrade must be installed in a primary, existing home (no new construction) and meet efficiency standards. Additionally, for qualified heat pumps installed in 2025, a valid QMID must be reported on line 29a. Note that the IRS has reported known issues with QMIDs that have either the letter O or I. Special rules also apply for joint occupants and owners of condos and cooperatives. 

Additionally, not selecting an answer to the question on line 25a typically would not impact the credit for your heat pump, so long as you didn’t report enabling property too. (Form 5965, line 25b-e). 
 

If you meet these requirements and you disagree with the IRS automated adjustment, then you must respond to the notice within the specific time frame. If you are still unsure why a change was made, then you should contact the IRS directly for more details. Typically the notice will tell you the exact line items that were changed and why. Review this article for tips on how to respond to or call the IRS,  How do I respond to an IRS notice (and what if they want to audit me)? 

Additionally, if your QMID does have the letter O or I in it, then you may just need to resubmit your Form 5965 and explain that you meet the requirements and have a valid QMID to dispute the changes. 

• How to claim an energy efficient home improvement tax credit – residential energy property
• Instructions for Form 5695 (2025)
• Understanding your IRS notice or letter
• TurboTax Audit Support Center

[gsprattling]

Thanks.

The only thing that I can think of is that my QMID does have the letter "I" (i) in it.  However, the notice did mention anything about it.

I took the route of responding in writing since getting through to the IRS has been impossible the last week.

Thanks for taking the time to explain what could be the cause.