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Solar Tax Credit

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nduetime

New Member
Joined
Jan 7, 2025
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5
Location
Fresno, California
I know there was a thread briefly touching on this topic last year but I’m creating this post in hopes of finding some advice and better understanding.

Last fall I purchased (1) EG4 2k and (1) EG4 1k hybrid mini split kit from Signature Solar. I’ve received them and installed them and am in the process of filing my last years taxes.

I usually do my on taxes using H&R Block software/app. This year I decided to pay for their tax preparer review prior to submitting.

The tax preparer reached out to me this weekend to tell me that the two heat pump mini splits I purchased can only be credited for a maximum of $500. They eventually tried to tell me it’s considered an appliance like a refrigerator and will not receive any additional credit beyond the $500 cap. I was told that they had to reach out to coworkers and supervisors to help them understand the energy tax credit.

Now before I committed to this purchase, I throughly researched these mini splits and how they relate to the energy tax credit. I read about other experience in claiming these units for tax credit for the previous year (2023 tax season). I was pretty confident that the two kits I purchased were eligible for 30% credit up to $2000 based on the research I’ve done online, the energy star website, and even the IRS tax form 5695.

At this point I’m kind of regretting my decision of opting for the tax preparer review. I’ve tried to explain exactly what I’ve purchased and why it is that I believe these are entitled to the 30% / $2000 tax credit. However, the preparer is not responding to my request to meet in person so that I can “show” the information I have compiled to support my stance.

Because of H&R Block policy, I don’t believe I can revert back to not using the tax preparer review. So now the only two way I see this playing out is: (1) Me to accept that my credit will not exceed $500 or (2) Somehow convincing the tax preparer that her understand of taxes and HVAC industrial definitions are incorrect.

Can anyone confirm that EG4 Hybrid Mini Splits are in fact “electric powered heat pumps”? I believe this would be the best/most accurate description/classification of what I purchased and am trying to claim credit for. I have EG4 product spec sheet that states it is “EG4 Hybrid AC/DC Mini-Split Air Conditioner / Heat Pump”. However, the tax preparer is stuck on the idea that this is an air conditioner and clearly does not understand that while that may be true, it misses the fact it utilizes inverter heat pump technology for which there are different credit limitations according to the IRS.

According to Energy Star website, electric air sources heat pumps are eligible for 30% / $2000 credit for units that are energy star certified, which both units are.

According to the IRS tax form 5695, I believe these units should be entered on line 29A. Can anyone confirm this to be the correct place to claim credit for these units?
 
how much did it cost you to "hire" them? btw, they are no better at tax prep than yourself. They are not certified or anything. Anyone can apply and work for them, just enter the numbers like you would on turbo tax and hit submit.

If I were you, I would file with a real CPA or actually do it yourself. It is very simple and you are correct (not them). It is still up to $2000 tax CREDIT at 30% of your project cost. Now if it cost you $1666, you would only get $500 in the credit, maybe that is where this issue is.
 
nduetime said:
According to Energy Star website, electric air sources heat pumps are eligible for 30% / $2000 credit for units that are energy star certified, which both units are.

According to the IRS tax form 5695, I believe these units should be entered on line 29A. Can anyone confirm this to be the correct place to claim credit for these units?
Click to expand...
It's not just simple energy star certification, not sure if the eg4 units qualify?

"To qualify for the IRA tax credit, heat pumps and heat pump hot water heaters must meet efficiency requirements, and be in the Consortium for Energy Efficiency’s highest non-”advanced” tier."
 
Sounds like it is time to contact your preparer's supervisor. It should be easy to explain that these units have a heating function as well as a cooling function which makes them a heat pump, not just a simple air conditioner. If that does not convince them, then ask to speak to their supervisor. The company guarantees that they will claim all deductions, you are just saving them from making a mistake ;)
 
You can show them the IRS instructions for Form 5695 and have them scroll down to the section that includes heat pumps:
"A combined credit limit of $2,000 for heat pump and heat pump water heaters; biomass stoves and boilers."

I just took the credit for my minisplit this year, I used Turbotax and did it myself. There are claims online about the required minimum SEER ratings, but I have never found that in any official IRS publication and I was not asked that question by Turbotax when I claimed the credit. Perhaps the vendors are propogating the SEER requirement to promote higher priced units, or maybe energystar.gov is pushing that, but that doesn't make it a requirement for the tax credit.
 
The official criteria for 2024 tax credit eligibility is based on CEE tier, so refer to the final 2024 lists here for a list of all eligible units by region: https://cee1.my.site.com/s/resources?id=a0VTR000002WdoH. I see an EG4 2k on the north region eligible list, and 2 different EG4 1ks on the south eligible list. I think the 2k isn't eligible for the south region as it's EER2 isn't high enough, north has tighter limits on low temp performance (the smaller units seem to be missing a COP at 5F spec which is probably why they aren't qualifying) but relaxes the EER2 limit a bit.
 
ogremustcrush said:
The official criteria for 2024 tax credit eligibility is based on CEE tier, so refer to the final 2024 lists here for a list of all eligible units by region: https://cee1.my.site.com/s/resources?id=a0VTR000002WdoH. I see an EG4 2k on the north region eligible list, and 2 different EG4 1ks on the south eligible list. I think the 2k isn't eligible for the south region as it's EER2 isn't high enough, north has tighter limits on low temp performance (the smaller units seem to be missing a COP at 5F spec which is probably why they aren't qualifying) but relaxes the EER2 limit a bit.
Click to expand...
Thanks, this helped me find the IRS language that relates to heat pump efficiency in the instructions for Form 5695 on line 29a:
"Line 29a. Enter the amounts you paid for electric or natural gas heat pumps that achieve the highest efficiency tier established by the CEE that is in effect as of the beginning of the calendar year in which the property is placed in service."

I tried to figure out how this all fits together. The CEE is a consortium of utility providers and some watchdog groups, they've been around since 1991. They were referenced in the Inflation Reduction Act as the entity that would define efficiencies for various types of equipment. CEE relies on other organizations for technical input. The CEE uses the efficiencies defined by Energystar.gov. The energystar page lists this for heat pumps:

Heat Pump Equipment (HP) ≥ 7.8 HSPF2/ ≥15.2 SEER2/ ≥11.7 EER2 for split systems
≥ 7.2 HSPF2 ≥15.2 SEER2/ ≥10.6 EER2 for single package equipment including gas/electric package units.

Vendors who want their equipment listed on the CEE spreadsheet submit their data to the Department of Energy, which accepts that information without testing or verification, and makes it available to the CEE. If you read all the fine print, there are no end of disclaimers about how no one is responsible for the accuracy of the list.

For anyone still awake, I believe that if you have a minisplit that meets the requirements of energystar.gov (SEER2 >=15.2), then you would meet the requirement as stated in the IRS instructions. The IRS doesn't say your minisplit has to be on the CEE list, it says it has to achieve the requirement for efficiency set by the CEE.
 
Mind you should use the 2024 definitions from Energy Star: https://web.archive.org/web/2024123...out/federal-tax-credits/air-source-heat-pumps since things changed for 2025, getting rid of the regional requirements and instead allowing the use of Energy Star Most Efficient lists for either Energy Star or Energy Star Cold Climate certified heat pumps.

2024 still had the regional requirements though. For South need to be Energy Star certified and meet certain requirements, and for North be listed as Energy Star Cold Climate certified and meet different requirements. The Energy Star Cold Climate is tricky though as it requires minimum capacity and efficiency levels at 5F as referenced by the page you linked and a lot of manufacturers haven't even published specs at the required 5F. So basically have to meet the requirements on the page you linked and the other 2024 Energy Star page. Or be on the CEE lists, which ultimately is the most certain method since they by definition meet the CEE requirements.
 
Last edited:
MarkSolar said:
For anyone still awake, I believe that if you have a minisplit that meets the requirements of energystar.gov (SEER2 >=15.2), then you would meet the requirement as stated in the IRS instructions.
Click to expand...
Yes, and AHRI certificates indicating this performance are, for one, on the SS website for both the 12k and 24k units. Also clear identification as a "heat pump". Notice also the * on certificate "potential IRA eligible although AHRI isn't a tax advisor blah blah"

Eg4 AHRI 12k certificate
 
Ok…first, I want to thank you all for your input. It certainly help me with a better understanding of thing as well as providing me with a bit of sanity. For a moment, I thought I must have been completely off base for my understanding of the situation. It’s also help me with confidence in the matter.

The tax preparer finally reached out to me to tel me I could stop by her office to discuss, which I plan on doing later today after work. My hope is that I can resolve this issue and hopefully get my taxes submitted today or tomorrow.

My next question may be a stretch and wishful thinking but I figured I would ask anyways as it is related.

These kits include the mini split and solar panels. These mini splits have the option to run off of DC solar, AC power, or can run off both DC then AC when DC is lacking. If I do not have these units (panels or mini split) hooked up to the grid, only running off the solar panels, could the solar panels be considered essential/required components of the mini splits? Could one argue that the cost of the solar panels be incorporated in the cost of the mini split and entered as a total for line 29A? The form indicates that one can receive credit for installation labor. And technically the panels have a spot to be claimed elsewhere. However, I understand the credit to only allow a one time claim for the panels. I’d prefer to have the ability to use that at a later time when the cost of the solar panels would be higher. The (11) panels that can with these kits would not maximize the potential credit compared to me purchasing many more panels later this year or next.

Does that make sense? I know I’m getting pretty far into the weeds with this question, I’m just trying to understand if there’s any merit or logic to my thoughts.
 
nduetime said:
Ok…first, I want to thank you all for your input. It certainly help me with a better understanding of thing as well as providing me with a bit of sanity. For a moment, I thought I must have been completely off base for my understanding of the situation. It’s also help me with confidence in the matter.

The tax preparer finally reached out to me to tel me I could stop by her office to discuss, which I plan on doing later today after work. My hope is that I can resolve this issue and hopefully get my taxes submitted today or tomorrow.

My next question may be a stretch and wishful thinking but I figured I would ask anyways as it is related.

These kits include the mini split and solar panels. These mini splits have the option to run off of DC solar, AC power, or can run off both DC then AC when DC is lacking. If I do not have these units (panels or mini split) hooked up to the grid, only running off the solar panels, could the solar panels be considered essential/required components of the mini splits? Could one argue that the cost of the solar panels be incorporated in the cost of the mini split and entered as a total for line 29A? The form indicates that one can receive credit for installation labor. And technically the panels have a spot to be claimed elsewhere. However, I understand the credit to only allow a one time claim for the panels. I’d prefer to have the ability to use that at a later time when the cost of the solar panels would be higher. The (11) panels that can with these kits would not maximize the potential credit compared to me purchasing many more panels later this year or next.

Does that make sense? I know I’m getting pretty far into the weeds with this question, I’m just trying to understand if there’s any merit or logic to my thoughts.
Click to expand...
Claim the panels in the solar spot on the forms. You can claim the solar credit any time you add more solar. Until it gets revoked.
 
Last edited:
I remember being able to claim everything for the heat pump instl except DIY labor (obviously, because someone would declare their labor at $100k/hr or such...not naming any names :ROFLMAO: )

I see what you're saying about the kit aspect not having separate pricing for the Solar panels - seems a complication. I think I'd focus on proving "it's a Heat Pump" for the moment...

So yeah, question is, would it be wrong to deduct entire kit with panels as "Heat Pump and installation components " ??
 
Sorry, I suppose I was interpreting line 21to include labor and associated cost as things that help make claiming line 29 possible.

The reason for this question stems from my conversation with Signature Solar that indicated they can not provide me with anything other than the sale receipt for my purchase. As such, my receipt show the items as kit and kit prices only. Meaning, I can not get anything that states the break down of panels and mini splits as individual line items. So, if I need to break these down to individuals components, I can do so by visiting the website for each individual items but I can’t print a receipt showing such. Does that make sense?
 
nduetime said:
The reason for this question stems from my conversation with Signature Solar that indicated they can not provide me with anything other than the sale receipt for my purchase.
Click to expand...
Crappy, and just what I was going to suggest asking for, a statement of what the panels were worth.

I didn't look at the SS kits but I know people in the past have "complained" about SS stuff there's no kit "discount ", all bundles were just the total of prices of components. If true, seems easy to "value" panels and just document it all?? I suggest doing as @Q-Dog said then.

Disclaimer: Ultimately, your tax comes down to yourself/preparer and the IRS. If pressed, guessing IRS has no idea wtf a hybrid Solar mini is. We are just discussing possibilities here lol 😆
 
nduetime said:
Ok…first, I want to thank you all for your input. It certainly help me with a better understanding of thing as well as providing me with a bit of sanity. For a moment, I thought I must have been completely off base for my understanding of the situation. It’s also help me with confidence in the matter.

The tax preparer finally reached out to me to tel me I could stop by her office to discuss, which I plan on doing later today after work. My hope is that I can resolve this issue and hopefully get my taxes submitted today or tomorrow.

My next question may be a stretch and wishful thinking but I figured I would ask anyways as it is related.

These kits include the mini split and solar panels. These mini splits have the option to run off of DC solar, AC power, or can run off both DC then AC when DC is lacking. If I do not have these units (panels or mini split) hooked up to the grid, only running off the solar panels, could the solar panels be considered essential/required components of the mini splits? Could one argue that the cost of the solar panels be incorporated in the cost of the mini split and entered as a total for line 29A? The form indicates that one can receive credit for installation labor. And technically the panels have a spot to be claimed elsewhere. However, I understand the credit to only allow a one time claim for the panels. I’d prefer to have the ability to use that at a later time when the cost of the solar panels would be higher. The (11) panels that can with these kits would not maximize the potential credit compared to me purchasing many more panels later this year or next.

Does that make sense? I know I’m getting pretty far into the weeds with this question, I’m just trying to understand if there’s any merit or logic to my thoughts.
Click to expand...
Somewhere on the Energy Star website, they use photos to describe applicable equipment - there's a photo of a mini-split in plain view, just for recalcitrant tax preparers! Show that to your preparer when you go.
 
CPA here. This is not tax advice and I'm not your accountant.

25C credit for heat pumps used to be $500 cap, updated to $2,000 as of Jan 1, '23. Preparer probably got old documentation.

H&R generally recruits people seasonally. By the time April rolls around they're probably up to speed, but most at this time haven't been thinking about taxes since last season. Being an early bird for your taxes is working against you here.

They are people with qualifications, but the IRS has 3ish levels of qualifications: unlimited, filing season, and PTIN holders. You can check here: https://irs.treasury.gov/rpo/rpo.jsf

If you aren't using a CPA, full time enrolled agent, or tax attorney I wouldn't bother. And the vast majority of people do not need those.

I personally have used freetaxusa for the past couple years.
 
nduetime said:
Sorry, I suppose I was interpreting line 21to include labor and associated cost as things that help make claiming line 29 possible.

The reason for this question stems from my conversation with Signature Solar that indicated they can not provide me with anything other than the sale receipt for my purchase. As such, my receipt show the items as kit and kit prices only. Meaning, I can not get anything that states the break down of panels and mini splits as individual line items. So, if I need to break these down to individuals components, I can do so by visiting the website for each individual items but I can’t print a receipt showing such. Does that make sense?
Click to expand...
@SignatureSolarJess might be able to help you with this. From what I've seen she gets shits done.
 
42OhmsPA said:
@SignatureSolarJess might be able to help you with this. From what I've seen she gets shits done.
Click to expand...
Hey! Thanks for the tag! So, we couldn't provide a receipt, as that would have to be paid, but we could provide a quote with the products itemized. You could print that and it would show the costs with taxes. Would that help?
 
nduetime said:
As such, my receipt show the items as kit and kit prices only. Meaning, I can not get anything that states the break down of panels and mini splits as individual line items. So, if I need to break these down to individuals components, I can do so by visiting the website for each individual items but I can’t print a receipt showing such. Does that make sense?
Click to expand...
The IRS doesn't employ HVAC technicians to analyze your tax return . If you have a receipt that says your minisplit kit cost $5000, put that amount plus any installation costs on line 29a and take your family out to dinner with the refund check.
 
nduetime said:
Sorry, I suppose I was interpreting line 21to include labor and associated cost as things that help make claiming line 29 possible.

The reason for this question stems from my conversation with Signature Solar that indicated they can not provide me with anything other than the sale receipt for my purchase. As such, my receipt show the items as kit and kit prices only. Meaning, I can not get anything that states the break down of panels and mini splits as individual line items. So, if I need to break these down to individuals components, I can do so by visiting the website for each individual items but I can’t print a receipt showing such. Does that make sense?
Click to expand...
Use the individual retail prices for each component in the kit to then pro-rate and allocate your proportional cost for the components from the kit receipt total. "Show your work" and keep it in your tax records.
 
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