Note: Credits for solar electric or solar water heating property have never been in-scope for Tax-Aide. Only Part II of Form 5695 is in-scope.  Also out-of-scope are credits for “green” vehicles, fuel cells, wind turbines, geothermal heat pumps, and battery storage.


See Pub 4012 page G-21 for what qualifies for the “energy efficient home improvement credit” and limitations; also refer to Instructions for Form 5695 if needed.

    • Note:  A 2022 law increased this credit for property placed in service after 2022; the increase does not apply to prior tax returns.  The increase extends through 2032 with no lifetime limit.
    • For prior returns, the credit was 10% of qualifying improvements, with maximum amounts on some items, and an overall maximum of $500 for all years since 2005.
    • Second homes, rental homes, and other property do not qualify.
  • Go to Form 5695 - Non-Business Energy Property page [Deductions > Credits Menu > Residential Energy Credits] and follow instructions on Pub 4012 page G-21.1 to G-21.3.
    • Note:  To avoid a possible IRS e-file reject, you must answer the questions and enter an address under Qualified Energy Efficiency Improvements (1st TaxSlayer button).  Don’t check the box indicating the improvements were related to construction of the home:  these are out-of-scope.
    • Note:  If entering Residential Energy Property Expenditures (2nd TaxSlayer button), you must click “Add Address” and add the taxpayer’s home address, even though you already entered it under the 1st TaxSlayer energy screen!  Failure to do so risks an IRS e-file reject.
    • Always check the actual generated Form 5695 for required addresses and completeness.
    • For certain items such as insulation, only the cost of the material can be claimed – not the cost of installing the material, permits, or any other costs.  The taxpayer must have documentation, such as the contractor invoice, to separate material costs from other costs.

Created with the Personal Edition of HelpNDoc: Revolutionize Your Documentation Output with HelpNDoc's Stunning User Interface