Fill out 5695 (Residential Energy Credits) online
Form 5695 is used to calculate and claim residential energy credits for qualifying energy-efficient improvements to your home. Part I covers the Energy Efficient Home Improvement Credit (for insulation, windows, doors, heat pumps, and other upgrades). Part II covers the Residential Clean Energy Credit (for solar panels, wind turbines, geothermal heat pumps, and battery storage).
How to fill out 5695 (Residential Energy Credits)
Determine which credit applies
Part I is for energy-efficient home improvements (insulation, windows, doors, heat pumps, water heaters, biomass stoves). Part II is for clean energy installations (solar panels, wind turbines, geothermal, battery storage). You may claim both.
Calculate Part I credit
Enter the cost of qualifying improvements on the appropriate lines. Apply the 30% credit rate (for most items). Observe the annual limits: $1,200 total for most improvements, $2,000 for heat pumps/biomass/water heaters, $3,200 combined maximum.
Calculate Part II credit
Enter the cost of qualifying clean energy property (equipment plus installation). Apply the 30% credit rate. There is no annual dollar cap for the Residential Clean Energy Credit.
Carry total to Form 1040
Add the Part I and Part II credits. Enter the total on Form 1040, Schedule 3 as a nonrefundable credit. The credit can reduce your tax to zero but cannot generate a refund (unused Part II credits may carry forward).
About 5695 (Residential Energy Credits)
Who needs this form
Homeowners who made qualifying energy-efficient improvements or installed clean energy systems in their primary residence during the tax year. Renters and landlords generally cannot claim these credits (the property must be your home).
Where to submit
File with the IRS as part of your annual federal income tax return (Form 1040). The credit reduces your tax liability directly.
Source and content freshness
- Filing deadlines may shift for weekends and holidays. Verify due dates with official instructions.
Common mistakes to avoid
- Claiming credits for improvements to rental or investment properties (credits are for your primary home only)
- Exceeding the annual credit limits ($3,200 per year for Part I improvements)
- Not keeping manufacturer certification statements proving the products qualify
- Confusing the two parts: Part I has annual limits, Part II has no annual cap (30% of cost)
- Forgetting to include installation costs, which are eligible in addition to equipment costs
Frequently asked questions
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Is there a lifetime cap on the solar tax credit?
No. The Residential Clean Energy Credit (Part II) for solar panels, wind turbines, geothermal, and battery storage has no annual or lifetime dollar cap. It equals 30% of the total cost (equipment plus installation) for systems placed in service through 2032. The rate drops to 26% in 2033 and 22% in 2034. If the credit exceeds your tax liability in a given year, the unused portion carries forward to the next year.
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