Energy credits for AC installation

[rsgandhi333]

Hi,

Do we get energy credits for installing an efficient AC unit? If yes, What are the documents required to support the claim?

Bests!

Rohan Gandhi

[HiCPA]

Hello @rsgandhi333 

According to the White House Fact Sheet here under the Inflation Reduction Act ,  "When families need to replace air conditioners, water heaters, or furnaces, they can save up to 30% with tax credits for efficient heating and cooling equipment that will save them hundreds of dollars on utility bills."

You will want to insure that the AC unit will be recognized as an Energy Star Most Efficient Unit. More information on Energy Star units can be found at the link here.   EnergyStar

For documentation, you will want to keep a record of your purchase through an invoice which documents the type of unit, date purchased, and cost.  TurboTax will guide you to enter in information about your AC unit so you can claim your credit under the "Credit and Deductions" section, in the "Your Home" section.

Enjoy your day!

[GabyC-EA]

If you install a recognized Energy Star/Alternative energy equipment  (like a certified Energy Star AC ) you can claim the Residential Energy Efficient Home Improvement credit .  The amount of the credit is $300 for air conditioner equipment  recognized as ENERGY STAR Most Efficient if installed before December 31, 2022. You can also claim 100% of the installation cost up to a lifetime limit of $500 (combined cost between equipment and installation). 

The Inflation Reduction Act increases the credit to 30 % of all costs and changes the lifetime limit to an annual limit of $600 if installed 2023.

To verify your equipment is credit eligible, ask your HVAC contractor to provide the Manufacturer Certification Statement for the equipment you plan to purchase.

A Manufacturer’s Certification Statement is a signed statement from the manufacturer certifying that the product or component qualifies for the tax credit.

Manufacturers should provide these Certifications on their website. Call the manufacturer, or search their website. EPA does not have copies of the Manufacturer's Certification Statement.

Taxpayers must keep a copy of the certification statement for their records, but do not have to submit a copy with their tax return.

If you are interested in finding more information about the Residential Energy Home Improvement credit and other energy credits included in the Inflation Reduction act , you can visit the resources listed below :

- Tax credits for energy-efficient home improvements are extended and expanded by the Inflation Reduc...

-  Equipment Tax Credits for Primary Residences 

- Energy Tax Credit: Which Home Improvements Qualify? 

- Energy Incentives for Individuals: Residential Property Updated Questions and Answers

 

 

[rsgandhi333]

Thank you!!!

[rsgandhi333]

Thank you!!

[raviraju88]

Looks like Turbotax does not support this. Where can we enter these deductions?

It says you cannot claim

[PattiF]

Use Form 5695 to figure out and take their residential energy credits. 

Login to your account

• Select Federal from the left menu.
• Go to Deductions and Credits.
• Scroll down to Your Home and click shown more.
• Click start next to Home Energy Credits

The AC unit would be entered in the Energy-Efficient Building Property section.

From the IRS:

Q2. Are the credits refundable or nonrefundable? (added December 22, 2022) A2. Both the Energy Efficient Home Improvement Credit and the Residential Clean Energy Property Credit are nonrefundable personal tax credits.  A taxpayer claiming a nonrefundable credit can only use it to decrease or eliminate tax liability.  A taxpayer will not receive a tax refund for any amount that exceeds the taxpayer’s tax liability for the year. 

@raviraju88 

[RP1127]

I noticed this post was from 2022.  I am thinking of buying a high efficiency HC this year.  Does this also apply for 2023?

[DoninGA]

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@RP1127 wrote:

I noticed this post was from 2022.  I am thinking of buying a high efficiency HC this year.  Does this also apply for 2023?

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The Energy Efficient Home Improvement Credit for qualified HVAC installations in 2023 is available on a 2023 federal tax return.

Go to these IRS websites for information - https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit

And - https://www.irs.gov/pub/taxpros/fs-2022-40.pdf