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Common questions on entering individual Form 5695 in ProConnect Tax

by ProConnect Tax Online Updated 3 months ago

What's new for Form 5695 for tax year 2023:

Energy efficient home improvement credit: The nonbusiness energy property credit has changed to the energy efficient home improvement credit. The credit is extended to property placed in service through December 31, 2022. See here for more information.

Residential clean energy credit: The residential energy efficient property credit has changed to the residential clean energy credit. The credit rate for property placed in service in 2022 through 2033 is 30%. See here for more information.

Get answers to frequently asked questions about entering information from Form 5695, Residential Energy Credits, in the individual module of Intuit ProConnect. Refer to Form 5695 instructions for additional information and limitations.

To generate Form 5695, Energy efficient home improvement credit starting in tax year 2023:

  1. Go to the Input Return tab.
  2. From the left of the screen, select Credits and choose CTC, EIC, Oth Credits.
  3. From the top of the screen, select the Home tab.
  4. Locate the Residential Clean Energy Credit (5695) section.
  5. Complete the following applicable information:
    • Solar electric property costs (Form 5695, Part I, line 1).
    • Solar water heating property costs (Form 5695, Part I, line 2).
    • Fuel cell property costs (Form 5695, Part I, line 8).
    • Kilowatt capacity of fuel cell property (xx.xx) (Form 5695, Part I, line 10).
    • Small wind property costs (Form 5695, Part I, line 3).
    • Qualified geothermal heat pump property costs (Form 5695, Part I, line 4).
  6. Any entry in the field Residential energy efficient property credit (Form 5695) [Override] will override the program's automatic calculation of the credit, and suppress Form 5695.

To generate the Residential clean energy credit starting in tax year 2023:

  1. Go to the Input Return tab.
  2. From the left of the screen, select Credits and choose CTC, EIC, Oth Credits.
  3. From the top of the screen, select the Home tab.
  4. Scroll down to the section Energy Efficient Home Improvement Credit (5695).
  5. Complete the following applicable information:
    • 1= improvements and costs were not made to main home located in U.S. (Form 5695, Part II, line 17a).
    • 1= some expenses used in construction (Form 5695, Part II, line 17c).
    • Insulation or system reducing heat loss or gain (Form 5695, Part II, line 19a).
    • Exterior windows or skylights (Form 5695, Part II, line 19d).
    • Exterior window costs from [first prior year] (Form 5695, Part II, line 19f).
    • Exterior window costs from [second prior year] (Form 5695, Part II, line 19f).
    • Exterior window costs from [third and fourth prior year] (Form 5695, Part II, line 19f).
    • Exterior window costs from [fifth and sixth prior year] (Form 5695, Part II, line 19f).
    • Exterior doors (Form 5695, Part II, line 19b).
    • Qualified metal or asphalt roof (Form 5695, Part II, line 19c).
    • Energy-efficient building property (Form 5695, Part II, line 22a).
    • Qualified furnace or hot water boiler (Form 5695, Part II, line 22b).
    • Circulating fan used in furnace (Form 5695, Part II, line 22c).
    • Qualified cost paid by other joint owner (after maximum dollar limitation).
      • This entry causes the limitation on line 6 of Form 5695 to be prorated. This isn't necessary for spouses filing a joint return.
  6. Any entry in Energy Efficient Home Improvement Credit (5695) [Override] will override the program's automatic calculation of the credit, and suppress Form 5695.
  1. Go to the Input Return tab.
  2. From the left of the screen, select Credits and choose CTC, EIC, Oth Credits.
  3. From the top of the screen, select the Home tab.
  4. Locate the Residential Clean Energy Credit (5695) section.
  5. Complete the following applicable information:
    • Solar electric property costs (Form 5695, Part I, line 1).
    • Solar water heating property costs (Form 5695, Part I, line 2).
    • Fuel cell property costs (Form 5695, Part I, line 8).
    • Kilowatt capacity of fuel cell property (xx.xx) (Form 5695, Part I, line 10).
    • Small wind property costs (Form 5695, Part I, line 3).
    • Qualified geothermal heat pump property costs (Form 5695, Part I, line 4).
  6. Any entry in the field Residential energy efficient property credit (Form 5695) [Override] will override the program's automatic calculation of the credit, and suppress Form 5695.
  1. Go to the Input Return tab.
  2. From the left of the screen, select Credits and choose Recovery Rebate, EIC, Residential Energy, Oth Credits.
  3. From the top of the screen, select the Home tab.
  4. Scroll down to the section Nonbusiness Energy Property Credit (5695).
  5. Complete the following applicable information:
    • 1= improvements and costs were not made to main home located in U.S. (Form 5695, Part II, line 17a).
    • 1= some expenses used in construction (Form 5695, Part II, line 17c).
    • Insulation or system reducing heat loss or gain (Form 5695, Part II, line 19a).
    • Exterior windows or skylights (Form 5695, Part II, line 19d).
    • Exterior window costs from [first prior year] (Form 5695, Part II, line 19f).
    • Exterior window costs from [second prior year] (Form 5695, Part II, line 19f).
    • Exterior window costs from [third and fourth prior year] (Form 5695, Part II, line 19f).
    • Exterior window costs from [fifth and sixth prior year] (Form 5695, Part II, line 19f).
    • Exterior doors (Form 5695, Part II, line 19b).
    • Qualified metal or asphalt roof (Form 5695, Part II, line 19c).
    • Energy-efficient building property (Form 5695, Part II, line 22a).
    • Qualified furnace or hot water boiler (Form 5695, Part II, line 22b).
    • Circulating fan used in furnace (Form 5695, Part II, line 22c).
    • Qualified cost paid by other joint owner (after maximum dollar limitation).
      • This entry causes the limitation on line 6 of Form 5695 to be prorated. This isn't necessary for spouses filing a joint return.
  6. Any entry in Nonbusiness energy credit (Form 5695) [Override] will override the program's automatic calculation of the credit, and suppress Form 5695.

Form 5695 doesn't have a location to reflect the amount of the credit that has already been used. Therefore, it's suggested that the credit be manually reduced. Use your word processor to create a statement, and attach it as a PDF to your return.

Follow these steps to attach a PDF to a return:

  1. Go to the Input Return tab.
  2. On the left of the screen, select General and choose Electronic Filing.
  3. Select e-file PDF/Miscellaneous.
  4. Select the blue e-file Attachment link at the top right.
  5. Click Attach PDF.
  6. Locate and select the PDF, and then click Upload.

Per the Form 5695 instructions for line 22a:

"A stove that uses the burning of biomass fuel to heat your home or heat water for your home that has a thermal efficiency rating of at least 75%. Biomass fuel is any plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers."

To enter the amount for Form 5695, line 22a:

  1. Go to the Input Return tab.
  2. From the left menu, select Credits and choose CTC, EIC, Oth Credits.
  3. From the top of the screen, select the Home tab.
  4. Scroll down to the Energy Efficient Home Improvement Credit (5695) section.
  5. Enter the amount in the Energy-efficient building property field.

ProConnect Tax will only check the Yes box on line 7a when there are qualified fuel cell property costs.

To enter qualified fuel cell property costs:

  1. Go to the Input Return tab.
  2. From the left of the screen, select Credits and choose CTC, EIC, Oth Credits.
  3. From the top of the screen, select the Home tab.
  4. Locate the Residential Clean Energy Credit (5695) section.
  5. Enter the Fuel cell property costs.
  6. Ente the Kilowatt capacity of fuel cell property (xx.xx).

ProConnect Tax will now check Yes on Form 5695, line 7a and complete lines 7a-11 of Form 5695.

Individual Form 5695, Residential Energy Credits won't generate if the credit amount has been overridden, or if you've claimed $500 or more nonbusiness energy property credits on prior tax returns.

Follow these steps to remove the override:

  1. Go to the Input Return tab.
  2. From the left of the screen, select Credits and choose CTC, EIC, Oth Credits.
  3. From the top of the screen, select the Home tab.
  4. Under the Residential Clean Energy Credit (5695) section, locate the Property subsection.
  5. Remove any entry in Residential Clean Energy Credit (5695) [Override].
  6. Scroll down to the Energy Efficient Home Improvement Credit (5695) section.
  7. Remove any entry in Energy Efficient Home Improvement Credit (5695) [Override].

If you've previously claimed Energy Efficient Home Improvement credits

These credits are subject to a lifetime limitation. Generally, you can't claim the credit if you have previously claimed $500 or more of the credit since 2006. For more information, refer to Form 5695 instructions.

If no overrides were entered:

  • Make sure that Form 1040 is generating a tax due. The residential energy credits can't be taken for returns that have no tax due. (Although, this shouldn't prevent Form 5695 from being generated.)
  • Make sure the Energy Efficient Home Improvement credit wasn't taken in prior years. Complete line 18 worksheet to determine whether the total of the credits on line 8 is $500 or more, you generally can't take this credit if this is the case.

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