What is Form 5695?
Form 5695 calculates two residential energy credits. Part I covers the Residential Clean Energy Credit: 30% of costs for solar panels, wind turbines, geothermal heat pumps, and battery storage with no annual cap. Part II covers the Energy Efficient Home Improvement Credit for heat pumps, windows, insulation, and similar improvements, subject to annual caps of $1,200 (Bucket A: insulation, windows, doors, electrical panel) and $2,000 (Bucket B: heat pumps, biomass stoves, water heaters). Both credits are non-refundable.
SupportedKey Lines
| Line | Description | Destination |
|---|---|---|
| Line 14 | Residential clean energy costs | Part I total |
| Line 15 | Clean energy credit (30%) | Schedule 3 Line 5 |
| Line 30 | Energy efficient improvement costs | Part II total |
| Line 32 | Improvement credit (capped) | Schedule 3 Line 5b |
How PaisaTax Handles It
- Part I computed at 30% of qualifying clean energy property costs with no cap
- Part II computed with dual bucket caps: $1,200 for Bucket A items + $2,000 for Bucket B items
- Non-refundable — both credits limited to remaining tax liability
- Annual caps reset each year for Part II improvements
Common Situations
- Solar installation: $25,000 solar panel system yields $7,500 clean energy credit (Part I, 30%).
- Heat pump upgrade: $4,500 heat pump qualifies for $2,000 credit (Bucket B cap in Part II).
- Combined improvements: New windows ($600 credit, Bucket A) plus heat pump ($2,000 credit, Bucket B) = $2,600 total Part II credit.