Instructions for IRS Form 5695 - Residential Energy Credit 2018

January 1, 2018 "Instructions For Irs Form 5695 - Residential Energy Credit" contain the latest filing requirements for the IRS-issued Form 5695. Download your copy of the instructions by clicking the link below.

IRS Form 5695 is a tax form issued by the United States Internal Revenue Service.

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2018
Department of the Treasury
Internal Revenue Service
Instructions for Form 5695
Residential Energy Credit
Section references are to the Internal Revenue Code unless
If you received a subsidy from a public utility for the
otherwise noted.
purchase or installation of an energy conservation
!
product and that subsidy wasn't included in your gross
CAUTION
General Instructions
income, you must reduce your cost for the product by the
amount of that subsidy before you figure your credit. This rule
also applies if a third party (such as a contractor) receives the
Future Developments
subsidy on your behalf.
For the latest information about developments related to Form
Residential Energy Efficient Property
5695 and its instructions, such as legislation enacted after they
were published, go to IRS.gov/Form5695.
Credit (Part I)
What's New
If you made energy saving improvements to more than one
home that you used as a residence during 2018, enter the total
Nonbusiness energy property credit has expired. The
of those costs on the applicable line(s) of one Form 5695. For
nonbusiness energy property credit expired on December 31,
qualified fuel cell property, see
Lines 7a and
7b, later.
2017. Part II has been reserved. To find out if legislation
extended the credit so you can claim it on your 2018 return, go to
You may be able to take a credit of 30% of your costs of
IRS.gov/Extenders.
qualified solar electric property, solar water heating property,
Purpose of Form
small wind energy property, geothermal heat pump property,
and fuel cell property. Include any labor costs properly allocable
Use Form 5695 to figure and take the residential energy efficient
to the onsite preparation, assembly, or original installation of the
property credit. Also use Form 5695 to take any residential
residential energy efficient property and for piping or wiring to
energy efficient property credit carryforward from 2017 or to
interconnect such property to the home. The credit amount for
carry the unused portion of the credit to 2019.
costs paid for qualified fuel cell property is limited to $500 for
Who Can Take the Credit
each one-half kilowatt of capacity of the property.
Qualified solar electric property costs. Qualified solar
You may be able to take the credit if you made energy saving
electric property costs are costs for property that uses solar
improvements to your home located in the United States in
energy to generate electricity for use in your home located in the
2018.
United States. No costs relating to a solar panel or other
Home. A home is where you lived in 2018 and can include a
property installed as a roof (or portion thereof) will fail to qualify
house, houseboat, mobile home, cooperative apartment,
solely because the property constitutes a structural component
condominium, and a manufactured home that conforms to
of the structure on which it is installed. The home doesn't have to
Federal Manufactured Home Construction and Safety
be your main home.
Standards.
Qualified solar water heating property costs. Qualified solar
You must reduce the basis of your home by the amount of
water heating property costs are costs for property to heat water
any credit allowed.
for use in your home located in the United States if at least half
Main home. Your main home is generally the home where
of the energy used by the solar water heating property for such
you live most of the time. A temporary absence due to special
purpose is derived from the sun. No costs relating to a solar
circumstances, such as illness, education, business, military
panel or other property installed as a roof (or portion thereof) will
service, or vacation, won't change your main home.
fail to qualify solely because the property constitutes a structural
component of the structure on which it is installed. To qualify for
Costs. For purposes of the credit, costs are treated as being
the credit, the property must be certified for performance by the
paid when the original installation of the item is completed, or, in
nonprofit Solar Rating Certification Corporation or a comparable
the case of costs connected with the reconstruction of your
entity endorsed by the government of the state in which the
home, when your original use of the reconstructed home begins.
property is installed. The home doesn't have to be your main
Costs connected with the construction of a home are treated as
home.
being paid when your original use of the constructed home
begins. If less than 80% of the use of an item is for nonbusiness
Qualified small wind energy property costs. Qualified small
purposes, only that portion of the costs that is allocable to the
wind energy property costs are costs for property that uses a
nonbusiness use can be used to determine the credit.
wind turbine to generate electricity for use in connection with
Association or cooperative costs. If you are a member of a
your home located in the United States. The home doesn't have
condominium management association for a condominium you
to be your main home.
own or a tenant-stockholder in a cooperative housing
Qualified geothermal heat pump property costs. Qualified
corporation, you are treated as having paid your proportionate
geothermal heat pump property costs are costs for qualified
share of any costs of such association or corporation.
geothermal heat pump property installed on or in connection
with your home located in the United States. Qualified
geothermal heat pump property is any equipment that uses the
ground or ground water as a thermal energy source to heat your
home or as a thermal energy sink to cool your home. To qualify
for the credit, the geothermal heat pump property must meet the
Oct 10, 2018
Cat. No. 66412G
2018
Department of the Treasury
Internal Revenue Service
Instructions for Form 5695
Residential Energy Credit
Section references are to the Internal Revenue Code unless
If you received a subsidy from a public utility for the
otherwise noted.
purchase or installation of an energy conservation
!
product and that subsidy wasn't included in your gross
CAUTION
General Instructions
income, you must reduce your cost for the product by the
amount of that subsidy before you figure your credit. This rule
also applies if a third party (such as a contractor) receives the
Future Developments
subsidy on your behalf.
For the latest information about developments related to Form
Residential Energy Efficient Property
5695 and its instructions, such as legislation enacted after they
were published, go to IRS.gov/Form5695.
Credit (Part I)
What's New
If you made energy saving improvements to more than one
home that you used as a residence during 2018, enter the total
Nonbusiness energy property credit has expired. The
of those costs on the applicable line(s) of one Form 5695. For
nonbusiness energy property credit expired on December 31,
qualified fuel cell property, see
Lines 7a and
7b, later.
2017. Part II has been reserved. To find out if legislation
extended the credit so you can claim it on your 2018 return, go to
You may be able to take a credit of 30% of your costs of
IRS.gov/Extenders.
qualified solar electric property, solar water heating property,
Purpose of Form
small wind energy property, geothermal heat pump property,
and fuel cell property. Include any labor costs properly allocable
Use Form 5695 to figure and take the residential energy efficient
to the onsite preparation, assembly, or original installation of the
property credit. Also use Form 5695 to take any residential
residential energy efficient property and for piping or wiring to
energy efficient property credit carryforward from 2017 or to
interconnect such property to the home. The credit amount for
carry the unused portion of the credit to 2019.
costs paid for qualified fuel cell property is limited to $500 for
Who Can Take the Credit
each one-half kilowatt of capacity of the property.
Qualified solar electric property costs. Qualified solar
You may be able to take the credit if you made energy saving
electric property costs are costs for property that uses solar
improvements to your home located in the United States in
energy to generate electricity for use in your home located in the
2018.
United States. No costs relating to a solar panel or other
Home. A home is where you lived in 2018 and can include a
property installed as a roof (or portion thereof) will fail to qualify
house, houseboat, mobile home, cooperative apartment,
solely because the property constitutes a structural component
condominium, and a manufactured home that conforms to
of the structure on which it is installed. The home doesn't have to
Federal Manufactured Home Construction and Safety
be your main home.
Standards.
Qualified solar water heating property costs. Qualified solar
You must reduce the basis of your home by the amount of
water heating property costs are costs for property to heat water
any credit allowed.
for use in your home located in the United States if at least half
Main home. Your main home is generally the home where
of the energy used by the solar water heating property for such
you live most of the time. A temporary absence due to special
purpose is derived from the sun. No costs relating to a solar
circumstances, such as illness, education, business, military
panel or other property installed as a roof (or portion thereof) will
service, or vacation, won't change your main home.
fail to qualify solely because the property constitutes a structural
component of the structure on which it is installed. To qualify for
Costs. For purposes of the credit, costs are treated as being
the credit, the property must be certified for performance by the
paid when the original installation of the item is completed, or, in
nonprofit Solar Rating Certification Corporation or a comparable
the case of costs connected with the reconstruction of your
entity endorsed by the government of the state in which the
home, when your original use of the reconstructed home begins.
property is installed. The home doesn't have to be your main
Costs connected with the construction of a home are treated as
home.
being paid when your original use of the constructed home
begins. If less than 80% of the use of an item is for nonbusiness
Qualified small wind energy property costs. Qualified small
purposes, only that portion of the costs that is allocable to the
wind energy property costs are costs for property that uses a
nonbusiness use can be used to determine the credit.
wind turbine to generate electricity for use in connection with
Association or cooperative costs. If you are a member of a
your home located in the United States. The home doesn't have
condominium management association for a condominium you
to be your main home.
own or a tenant-stockholder in a cooperative housing
Qualified geothermal heat pump property costs. Qualified
corporation, you are treated as having paid your proportionate
geothermal heat pump property costs are costs for qualified
share of any costs of such association or corporation.
geothermal heat pump property installed on or in connection
with your home located in the United States. Qualified
geothermal heat pump property is any equipment that uses the
ground or ground water as a thermal energy source to heat your
home or as a thermal energy sink to cool your home. To qualify
for the credit, the geothermal heat pump property must meet the
Oct 10, 2018
Cat. No. 66412G
requirements of the Energy Star program that are in effect at the
Credit for the elderly or the disabled.
time of purchase. The home doesn't have to be your main home.
Nonbusiness energy property credit (Part II of this form).*
Adoption credit.
Qualified fuel cell property costs. Qualified fuel cell property
Mortgage interest credit.
costs are costs for qualified fuel cell property installed on or in
District of Columbia first-time homebuyer credit.
connection with your main home located in the United States.
Alternative motor vehicle credit.
Qualified fuel cell property is an integrated system comprised of
Qualified plug-in electric vehicle credit.
a fuel cell stack assembly and associated balance of plant
Qualified plug-in electric drive motor vehicle credit.
components that converts a fuel into electricity using
*If applicable.
electrochemical means. To qualify for the credit, the fuel cell
property must have a nameplate capacity of at least one-half
Also, include on lines 1 through 4, and 8, any labor costs
kilowatt of electricity using an electrochemical process and an
properly allocable to the onsite preparation, assembly,
TIP
electricity-only generation efficiency greater than 30%.
or original installation of the property and for piping or
wiring to interconnect such property to the home.
Costs allocable to a swimming pool, hot tub, or any other
energy storage medium which has a function other than
!
the function of such storage don't qualify for the
Line 1
CAUTION
residential energy efficient property credit.
Enter the amounts you paid for qualified solar electric property.
See
Qualified solar electric property
costs, earlier.
Joint occupancy. If you occupied your home jointly with
someone other than your spouse, each occupant must complete
Line 2
his or her own Form 5695. To figure the credit, the maximum
qualifying costs that can be taken into account by all occupants
Enter the amounts you paid for qualified solar water heating
for qualified fuel cell property costs is $1,667 for each one-half
property. See
Qualified solar water heating property
costs,
kilowatt of capacity of the property. The amount allocable to you
earlier.
for qualified fuel cell property costs is the lesser of:
1. The amount you paid, or
Line 3
2. The maximum qualifying cost of the property multiplied by
Enter the amounts you paid for qualified small wind energy
a fraction. The numerator is the amount you paid and the
property. See
Qualified small wind energy property
costs,
denominator is the total amount paid by you and all other
earlier.
occupants.
These rules don't apply to married individuals filing a joint
Line 4
return.
Enter the amounts you paid for qualified geothermal heat pump
Example. Taxpayer A owns a house with Taxpayer B where
property. See
Qualified geothermal heat pump property
costs,
they both reside. In 2018, they installed qualified fuel cell
earlier.
property at a cost of $20,000 with a kilowatt capacity of 5.
Taxpayer A paid $12,000 towards the cost of the property and
Lines 7a and 7b
Taxpayer B paid the remaining $8,000. The amount to be
allocated is $16,670 ($1,667 x 10 (kilowatt capacity x 2)). The
Any qualified fuel cell property costs must have been for your
amount of cost allocable to Taxpayer A is $10,002 ($16,670 x
main home located in the United States. See
Main
home, earlier.
$12,000/$20,000). The amount of cost allocable to Taxpayer B
If you check the “No” box, you can't include any fuel cell property
is $6,668 ($16,670 x $8,000/$20,000).
costs on line 8.
Nonbusiness Energy Property Credit
If you check the “Yes” box, enter the full address of your main
(Part II)
home during 2018 on line 7b.
If you and your spouse are filing jointly and you each have
RESERVED FOR FUTURE USE
different main homes with qualified fuel cell property costs,
provide on line 7b the address of your main home. Add a sheet
At the time these instructions went to print, the
providing the address of your spouse's main home. You and
nonbusiness energy property credit (Part II of this form)
!
your spouse should add your qualified fuel cell property costs
had expired. You can’t claim the nonbusiness energy
CAUTION
together on line 8 of one Form 5695.
property credit for property placed in service after 2017. Part II is
now shown as “Reserved for Future Use” in case Congress
extends the credit to 2018. To find out if legislation extended the
Line 8
credit so you can claim it on your 2018 return, go to
IRS.gov/
Enter the amounts you paid for qualified fuel cell property. See
Extenders.
Qualified fuel cell property
costs, earlier.
Specific Instructions
Line 14
Complete the following
worksheet
to figure the amount to enter
Part I
on line 14. If you are claiming the child tax credit or the credit for
other dependents (ODC) for 2018, the amount you enter on
Residential Energy
line 4 of the worksheet depends on whether you are filing Form
Efficient Property Credit
2555 or Form 2555-EZ.
If you are filing Form 2555 or Form 2555-EZ, enter the
amount, if any, from line 16 of the Child Tax Credit and Credit for
Before you begin Part I.
Other Dependents Worksheet in Pub. 972.
Figure the amount of any of the following credits you are
Otherwise, enter the amount from line 14 of the Line 14
claiming.
Worksheet in Pub. 972.
-2-
Instructions for Form 5695 (2018)
If you aren't claiming the child tax credit or the credit for
Manufacturer’s certification. For purposes of taking the
other dependents (ODC) for 2018, you don't need Pub.
credit, you can rely on the manufacturer’s certification in writing
TIP
972.
that a product is qualifying property for the credit. Don't attach
the certification to your return. Keep it for your records.
Residential Energy Efficient Property Credit
Line 16
Limit Worksheet—Line 14
If you can't use all of the credit because of the tax liability limit
(that is, line 14 is less than line 13), you can carry the unused
1.
Enter the amount from Form 1040,
portion of the credit to 2019.
line 11; or Form 1040NR,
line 45
1.
. . . . . . . . . . . . . . . . . . .
File this form even if you can't use any of your credit in 2018.
2.
Enter the total, if any, of your credits
Part II
from Schedule 3 (Form 1040), lines
48 through 51; and Schedule R,
Nonbusiness Energy Property Credit
line 22; or Form 1040NR, lines 46
through 48
2.
. . . . . . . . . . . . . . . .
RESERVED FOR FUTURE USE
3.
Enter the amount, if any, from Form
See the
Caution
in the General Instructions under Nonbusiness
5695, line 30*
3.
. . . . . . . . . . . . . .
Energy Property Credit (Part II), earlier.
4.
If you are filing Form 2555 or Form
2555-EZ, enter the amount, if any,
from line 16 of the Child Tax Credit
and Credit for Other Dependents
Worksheet in Pub. 972. Otherwise,
enter the amount, if any, from line 14
of the Line 14 Worksheet in Pub.
972
4.
. . . . . . . . . . . . . . . . . . . . .
5.
Enter the amount, if any, from Form
8396, line 9
5.
. . . . . . . . . . . . . . .
6.
Enter the amount, if any, from Form
8839, line 16
6.
. . . . . . . . . . . . . . .
7.
Enter the amount, if any, from Form
8859, line 3
7.
. . . . . . . . . . . . . . .
8.
Enter the amount, if any, from Form
8910, line 15
8.
. . . . . . . . . . . . . . .
9.
Enter the amount, if any, from Form
8936, line 23
9.
. . . . . . . . . . . . . . .
10.
Add lines 2 through 9
. . . . . . . . .
10.
11.
Subtract line 10 from line 1. Also
enter this amount on Form 5695,
line 14. If zero or less, enter -0- on
Form 5695, lines 14 and 15
11.
. . . .
*If applicable.
-3-
Instructions for Form 5695 (2018)

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