5695 popping up when it appears random, I noticed something on one of mine

[Just-Lisa-Now-]

Ive had the 5695 pop up on 3 different clients now, insisting I mark PartII Line 17a.  One of them had an amount in the lifetime limitation smart worksheet from 2017, so I didn't think much of it, they had nothing this year, so I checked a box. 

The next one didnt have anything in the lifetime limitation smart worksheet, ok, the season is early, may be a program quirk...they had nothing this year, so I checked the no box and moved on....(now Im banging my head trying to remember which client it was so I can investigate more)

The third one, showed nothing in the lifetime limitation box either, but I had some free time and I dug back through their prior year returns and found they had the $500 credit in 2016, but couldnt use it (no taxable income), so I think the open checkbox is coming from somewhere, even though the 2019 form 5695 shows nothing about this prior year, its not just random.

Does anyone know offhand (I havent even tried to research it, Im being lazy, its still dark on a Sunday morning and this just popped in my head), should this credit that my client had back in 2016 but couldnt use, is it supposed to carryover (which I dont see happening anywhere) or is it a use or or lose it credit, and if so, could they still use it again in the future since it wasnt ever really used before?   

(its actually a moot point with this particular client, they wont need to file returns anymore, they dont have enough income (retired on SS with a small pension), but Id like to keep it in my mental rolodex for future clients)

[IRonMaN]

I have had a few of those pop up but they didn't affect the current year so I just kept on trucking.  I'm not going to take the time to try and figure out what Intuit did - most of the time Intuit doesn't know why they did it so how am I supposed to know? 😕

[qbteachmt]

I can answer this part: "should this credit that my client had back in 2016 but couldnt use, is it supposed to carryover"

As I understood it while working on my own taxes, yes, the unused credit carries on, since that is a Lifetime limit. Tracking this is similar to Form 8606. The math doesn't kick in unless you have another improvement/need for the credit and still haven't hit the limit (doors vs windows) and the regulation applies to that tax year. It's nonrefundable, so you can only use it by carry forward.

https://www.irs.gov/newsroom/energy-incentives-for-individuals-residential-property-updated-question...

https://turbotax.intuit.com/tax-tips/home-ownership/energy-tax-credit-which-home-improvements-qualif...

For instance, I am carrying forward an available amount from putting in a new slider a couple of years ago. It was only 1, and we did not hit the lifetime limit of $500 at that time, and I saw the credit balance is being carried forward on the worksheet.

https://www.irs.gov/instructions/i5695

Jump to

Lifetime Limitation Worksheet—Line 18

[Just-Lisa-Now-]

Im not seeing the carryforward anywhere...maybe its on the federal carryover worksheet? I'll check next week when Im back in the office) and again it is a moot point with this particular client, they wont have any taxable income anytime soon unless they win the lotto or something, I'll be more vigilant on the next client I see it pop up on to try and track it down.

[qbteachmt]

There would be two reasons this has follow up, as example: You have a qualifying project for under $5,000 and the 10% limit means you have a bit more headroom available on your next project that you submit to tax credit (this is my situation). The other would be, I suppose, the available and unused credit you have from the qualifying project, but didn't need to/get to use against taxable income. And now we have reached the end of my understanding of this tax regulation provision  🙂

[taxiowa · Accepted solution]

There is no carryforward of non-business energy credits like doors, water heater, furnace and windows.  There is a carryforward on geo and solar products.    Just answer the question no and move on.  It would be worse if Intuit did not keep track of used credits.