Energy Credit

[BON]

I have a client that purchased a new furnace for $7,500. Is it 10% of purchase price or just a $150.00 credit and where would I enter the amount and do you have to generate a form 5695?   

[George4Tacks]

My guess is that your client had previously taken $350 of the maximum $500 credit in an earlier year. Look for any entry for Credit claimed in ...

https://www.irs.gov/newsroom/energy-incentives-for-individuals-residential-property-updated-question...

Q. What improvements qualify for the residential energy property credit for homeowners? (updated April 27, 2021)

A. In 2018, 2019,  2020, and 2021, an individual may claim a credit for (1) 10% of the cost of qualified energy efficiency improvements and (2) the amount of the residential energy property expenditures paid or incurred by the taxpayer during the taxable year (subject to the overall credit limit of $500).

[BON]

No they have not taken any energy credits in the past three years so can they take $500 and where do I enter the information?  Is it on screen 38.2 residential energy credit carryover for 2021? 

Thank You 

[BON]

I am so confused with this energy credit for a new furnace.  I guess the input should be for Nonbusiness Property Credit.  Would that be correct?  The client has never taken any type of energy credit.

Thank You

[George4Tacks · Accepted solution]

You are in the right spot. Review the instructions for 5695

[qbteachmt]

You have to read for the Equipment, too:

You may be able to take these credits if you made energy saving improvements to your principal residence during the taxable year. In 2018, 2019 2020, and 2021 the residential energy property credit is limited to an overall lifetime credit limit of $500 ($200 lifetime limit for windows). There are also other individual credit limitations:

• $50 for any advanced main air circulating fan
• $150 for any qualified natural gas, propane, or oil furnace or hot water boiler
• $300 for any item of energy-efficient building property

The residential energy property credit is nonrefundable. A nonrefundable tax credit allows taxpayers to lower their tax liability to zero, but not below zero.

https://www.irs.gov/newsroom/energy-incentives-for-individuals-residential-property-updated-question...