Federal Tax Credits IRS F5695

Find the IRS F5695 at the link here - https://www.irs.gov/forms-pubs/about-form-5695

Part I: Residential Energy Efficient Property Credit

This part covers credits for the installation of certain energy-efficient property in your home. The credits are calculated based on the costs of eligible property, including:

1. Solar Electric Property:

   • Cost of solar panels or photovoltaic systems that generate electricity for use in a home.

2. Solar Water Heating Property:

   • Cost of solar water heating systems that provide hot water for use in a home (not for swimming pools or hot tubs).

3. Fuel Cell Property:

   • Cost of fuel cells that generate electricity for the home. The credit is based on the kilowatt capacity of the cells.

4. Small Wind Energy Property:

   • Cost of wind turbines that generate electricity for use in a home.

5. Geothermal Heat Pump Property:

   • Cost of geothermal heat pumps that heat and cool a home.

Part II: Nonbusiness Energy Property Credit

This part covers credits for other energy-efficient improvements made to a home, such as:

1. Qualified Energy Efficiency Improvements:

   • Insulation materials or systems

   • Exterior doors

   • Exterior windows and skylights

   • Certain types of roofing

2. Residential Energy Property Costs:

   • High-efficiency heating, cooling, and water-heating equipment, including:

     • Electric heat pumps

     • Central air conditioners

     • Natural gas, propane, or oil water heaters

     • Biomass fuel property

Important Considerations

• Credit Amounts:

  • The credits in Part I are generally a percentage of the cost of the property.

  • The credits in Part II are subject to specific dollar limits for each type of property and an overall limit.

• Installation Costs:

  • For some property types, installation costs may also be included in the credit calculation.

• Principal Residence:

  • Most credits apply to improvements made to a taxpayer's principal residence, although some can apply to second homes.

How to Claim the Credits

1. Complete Form 5695:

   • Calculate the credits on Form 5695.

   • Transfer the total credits to Schedule 3 (Form 1040), Additional Credits and Payments.

2. Attach Documentation:

   • Keep receipts and product information that certify the property meets required energy efficiency standards.

Summary of Credits on Form 5695

• Part I: Residential Energy Efficient Property Credit:

  • Solar Electric Property

  • Solar Water Heating Property

  • Fuel Cell Property

  • Small Wind Energy Property

  • Geothermal Heat Pump Property

• Part II: Nonbusiness Energy Property Credit:

  • Qualified Energy Efficiency Improvements

  • Residential Energy Property Costs

Remember, tax laws can change, so always refer to the latest version of IRS Form 5695 and its instructions for the most current information.