Like so many things tax related, form 5695 may seem overly complicated to many. We have located some helpful information and sources for those doing it themselves. Even if your accountant does your taxes, you have to know what they need to get the most you are entitled to.
First of all, make sure you are filling out the right part of the form.
What type of system did you install? If its one of the following, complete Part 1 for Non-business Energy Tax Credits.
Max credit: 30% of the cost of the improvement, up to $1,500.
If you installed one of these souped-up systems, complete Part 2 for Residential Energy Efficient Property Credit.
Max credit: 30% of the cost, with no limit except for a kilowatt limit on fuel cells.
Like other major expenses, keep your receipts. For these tax credits, you also need to separate the labor from the materials costs, as the labor is not deductible here. Manufacturers certifications should be kept on file also. You don’t need to send them in with your return however.
Coordinate with Form 1040 and other forms Part 12 is pretty simple. Just enter the total (line 11) on form 1040 line 52. Part 2 gets a bit more tricky. Other credits claimed on other form can affect the deduction here.
Read more at the link above. As always, we can speak in general terns only. We do hope that these guidelines help get you going in the right direction. Every situation is different, and you should consult your tax advisor to answer your specific questions.
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