I'm trying to get the $2000 tax credit for the heat pump water heater. But I do not see an option for that. I looked through all the Energy saving section.

In TurboTax, open your tax return

• Click on Federal in the left-hand column, then on Deductions & Credits on top of the screen
• Scroll down to All Tax breaks, locate the section Your Home and click on Show more

The deduction for a heat pump must meet specific qualifications and is taken on Form 5965.

Heat pumps and biomass stoves and boilers with a thermal efficiency rating of at least 75% qualify for a credit up to $2,000 per year. Costs may include labor for installation.

Form 5695 (Residential Energy Credits) is used to calculate tax credits for energy efficient improvements and alternative energy equipment.

To add or remove this form:

1. Open or continue your return
2. Inside TurboTax, search for this exact phrase including the comma and spaces: 5695, residential energy credit
3. Select the Jump to link in your search results
4. At the bottom of the Energy-Saving Home Improvements screen, answer Yes, then select Continue
   • To delete the 5695, answer No, select Continue, and then answer Yes on the following screen to confirm the deletion
5. Follow the instructions to enter your energy-saving improvement costs

The IRS offers several ways for taxpayers to cut their tax bills through investing in certain energy-efficient appliances and home improvements. This can include upgrades like energy-efficient water heaters, furnaces, air conditioners, windows, doors and similar investments, but also clean vehicles and related equipment.

Installing alternative energy equipment in your home such as solar panels, heat pumps, windows, doors and roofing can qualify you for a credit up to 30% of your total cost. 

1. Energy-Efficient Home Improvement Credit

Recently renamed from the Nonbusiness Energy Property Credit, this tax credit originally expired at the end of 2021. The Inflation Reduction Act changed the fate of this credit by not only reinstating it, but substantially expanding the impact starting in 2023 through 2032.

The old rules apply for 2022, essentially extending the previous credit by one year. Afterwards, the credit for the costs of installing certain energy-efficient upgrades such as home insulation, windows, doors, roofing, and more increases from 10% to 30%.

 It will also be expanded to cover certain types of stoves, boilers, electric panels, and other related equipment with a greater set of limits (up to $1,200 per year vs. the previous $500 lifetime limit). If you can manage to spread your qualifying home improvement projects throughout the credit’s current, upgraded availability (through December 31, 2032), you could net up to $12,000 in tax credit value over ten years through the Energy Efficient Home Improvement Credit.

The annual limits on the credit for specific types of qualifying home improvements will be enhanced starting in 2023 as well. Specifically, credit limits will be the following:

• Home energy audits: $150
• Exterior doors: $250 per door (up to $500 per year)
• Exterior windows and skylights, central A/C units, electric panels and related equipment, natural gas, propane and oil water heaters, furnaces or hot water boilers: $600
• Heat pumps and biomass stoves and boilers: $2,000 (this one category qualifies to go above the $1,200 annual limit)

If you meet the criteria of an energy tax credit covered above, you generally can claim the credit on your return subject to certain limitations.

 Tax credits reduce the amount of taxes you owe dollar-for-dollar. For example, if you owe $1,000 in federal taxes but are eligible to claim a $1,000 tax credit, your net tax liability drops to zero. These energy credits are non-refundable credits meaning that they can lower your taxes but won’t result in a refund.  

You may have the opportunity to roll over unused portions of tax credits to future years, allowing you to claim their full value down the road when you have additional tax liability.

How do you claim energy efficient tax credits on your tax return?

To claim the credits, you'll need IRS Form 5695.

Click here for additional IRS information regarding Energy Efficient Home Improvement Credit.

Click here for additional information on Energy Saving Credits.

Click here for "What is IRS Form 5965?"

I see many of the options but non mention a heat pump water heater for me. I see the biomass, furnaces etc. But no heat pump water heater. 

Thanks to all who have shared your experiences and insights.  Turbotax clearly has a role to play in keeping we users informed about situations such as this.  No doubt the delays within the IRS are due to budget cuts and resulting inadequate manpower.  But Turbotax simply provided the product using the old rules with no message to alert the user of the need to wait.  This, I cannot find a way to understand.

Guess we can blame "the government" all we want but the official form has been available for a week now.  So, blame private enterprise... still the same 2022 input on TT that gives me $150 instead of $2600.  Might as well file paper... thankfully haven't paid them anything.

I also tried to enter items that carry an tax credit for 2023 and TurboTax did it wrong.  I understand that the form is not ready yet, but there should at least be a warning on TurboTax to prevent users from suspecting an error and digging into the IRS website to find the rules.  

As of 2/7 updated form is still not available for the $2000 credit!  Any update?

It says it was updated today, but i am still getting the wrong credit calculated for the insulation portion 

I tried to file today and it still wasn't working. Are there any updates on when the form will be up and running so we can file??

Today, 2/7/2024, I received a text from TurboTax that Form 5695 is now available and I could continue working on my filing.  I'm using the online version of TurboTax.  I tried... It's still showing a credit higher than the allowable amount.  The maximum should be $2,000 for a qualifying heat pump (AC/Heating.)  I followed the instructions to delete that Form and start over.  It still calculated the wrong amount, which is 30% of the cost I specified... which is more than $2,000.  I can't file until this is corrected.  Why did I receive a text saying the form was available now when it doesn't look like its calculating correctly?  Don't know...