New Form 5695 Had new electrical panel installed 2023. New furnace installed 2022. Can I take the $600 credit for the 2023 elec panel? IRS unable to answer my question.

[ju4leigh]

Directions say panel has to be 'installed with qualified energy efficient improvements or property.

Because I installed the qualified furnace in 2022, does that mean I can't take the credit for the new electrical panel installed in 2023?

Panel was 50 years old and couldn't handle the load anymore.

Thanks!

[JohnW152 · Accepted solution]

It sounds like the panel qualifies for the credit, if it was installed in conjunction with a natural gas, propane, or oil furnace.

According to Line 25a in the 2023 Instructions for Form 5695:

Enter the amounts you paid for improvements or replacement of panelboards, subpanelboards, branch circuits, or feeders that were installed in a manner consistent with the National Electric Code, have a load capacity of at least 200 amps, and were installed with qualified energy efficiency improvements or qualified energy property.

[Bolding mine.]

According to Section B—Residential Energy Property Expenditures in the instructions:

Qualified energy property is any of the following.

• Certain electric or natural gas heat pump water heaters; electric or natural gas heat pumps; central air conditioners; and natural gas, propane, or oil water heaters.

• Natural gas, propane, or oil furnaces and hot water boilers.

• Certain biomass stoves and biomass boilers.

• Certain improvements or replacements of panelboards, subpanelboards, branch circuits, or feeders.

[Bolding mine.]

Assuming the furnace you installed was powered by natural gas, propane or oil, the only question would be whether the panels would need to be installed in the same year as the furnace.

According to Internal Revenue Code section 25C(d)(2)(D):

Any improvement to, or replacement of, a panelboard, sub-panelboard, branch circuits, or feeders which—

(i) is installed in a manner consistent with the National Electric Code,

(ii) has a load capacity of not less than 200 amps,

(iii) is installed in conjunction with—

(I) any qualified energy efficiency improvements, or

(II) any qualified energy property described in subparagraphs (A) through (C) for which a credit is allowed under this section for expenditures with respect to such property, and

(iv) enables the installation and use of any property described in subclause (I) or (II) of clause (iii).

[Bolding mine.}

The code doesn't require that the panels be installed in the same year as the qualified energy property, only in conjunction with the property's installation.  Since the old panel couldn't handle the new furnace, the new one was installed in conjunction with the installation of the furnace. 

[ju4leigh]

Thanks so much, JohnW152!!  I do meet all the qualifications, except I was using 'in conjunction with' meaning at the same time.

So, I will take your advice and put in for the panel credit for 2023.

Appreciate your quick response