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Hi I am trying to get my credit for putting in a new HVAC unit. I was told it was a $300 federal credit. It won't let me take it. Do you know why?

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Intuit Alumni

Hi I am trying to get my credit for putting in a new HVAC unit. I was told it was a $300 federal credit. It won't let me take it. Do you know why?

There are three possible reasons I can think of, input error (most likely), it has to be on your main home or you have already taken the credit up to the limit in the past. See this link for rules and the information below for further information on the topic.

There are 2 different credits available:

  • Nonbusiness energy property credit is for installing energy efficient improvements (insulation, windows, doors, etc.) on your main residential dwelling located in the U.S.
  • Residential energy efficient property credit is for installing alternative energy equipment (solar- or wind-powered, etc.) on your main dwelling or a second home located in the U.S.

All improvements to an existing home qualify. Notice that most of the items you can get the Nonbusiness energy property credit for are a normal part of building a new house and therefore don't qualify. The intention of the law was to "retrofit" an existing house that wasn't built to be as energy-efficient.

·         Any insulation material or system that is specifically and primarily designed to reduce heat loss or gain of a home when installed in or on such a home.

·         Exterior windows and skylights.

·         Exterior doors.

·         Any metal roof with appropriate pigmented coatings or asphalt roof with appropriate cooling granules that are specifically and primarily designed to reduce the heat gain of your home.

The non-business energy property credit can reduce your tax bill for some of the costs you incur to make energy-efficient improvements to your home. Your tax credit equals 10 percent of those costs, with a maximum total lifetime credit of $500 and a lifetime limit of $200 for windows portion.

Items that qualify for the Residential energy efficient property credit can be installed and qualify in both old and newly constructed homes. These include the  purchase and installation of solar electric systems, geothermal heat pumps, solar hot water heaters, wind turbines and fuel cell property. The allowable credit is equal to 30 percent of an unlimited amount of costs on those items.

To enter information on Form 5695 in TurboTax follow the below steps.

1.       Sign into TurboTax Online

2.       Continue your return by click Taxes > Tax Timeline > Continue your return.

3.       Go to the Federal Taxes tab (Personal tab in TurboTax Home and Business)

4.       Click on Deductions and Credits > Jump to full list

5.       Scroll down to Your Home section and click Show More

6.       Find Home Energy Credits > click Start/Revisit

7.       This will bring you to the Home-Savings Home Improvements page. Here you will see a list of improvements you may claim.

8.       Proceed through the interview to add your home improvements.  

Click the link for IRS information on what can be claimed on Form 5695 Residential Energy Credits.

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