vom 9695 Residential Energy Credit

OMB No. 1545-0214

> Attach to Form 1040. > See Instructions on back. 1 98 5
De it of the Tr
Irtowel Revenue Sona > For Paperwork Reduction Act Notice, see Instructions on back. 30

Name(s) as shown on Form 1040 Your social security number

Enter the address of your principal residence on which the credit is claimed if it is different from the address shown on Form 1040.

Ifyou have an energy credit carryover from a previous tax year and no energy savings costs this year, skip to Part Ill, ine 24.

Fill in your energy conservation costs (but do not include repair or maintenance costs).

1 Was your principal residence substantially completed before April 20, 1977? (See instructions) >

Yes No

Note: You MUST answer this question. Failure to do so will delay the processing of your return. If you checked the “No” box, you

CANNOT claim an energy credit under Part | and you should not fill in lines 2a through 12 of this form.

$2,000} 00

2 a Insulation .
b Storm (or thermal) windows or doors
¢ Caulking or weatherstripping . .
d= Areplacement burner for your existing furnace that reduces fuel use .
e Adevice for modifying flue openings to make a heating system more efficient
f Anelectrical or mechanical furnace ignition system that replaces a gas pilot light
g Athermostat with an automatic setback
h_ Ameter that shows the cost of energy used
3 Total (add lines 2a through 2h). oe .
4 Enter the part of expenditures made from nontaxable government grants and subsidized financing
5 Subtract line 4 from line3 . a
6 Maximum amount of cost on which credit can be figured
7 Enter the total energy conservation costs for this residence. Add lines 2 of yc your , 1978, 1979, and 1980
Forms 5695 and line 3 of your 1981, 1982, 1983, and 1984 Forms 5695
8 Subtract line 7 from line 6. If line 7 exceeds line 6, enter zero here and on line 12
9 Enter the nontaxable grants and subsidized financing shown on line 4 of this form

10 Subtract line 9 from line 8. If zero or less, do not complete the rest of Part |

11 Enter the amount on line 5 or line 10, whichever is less .

12 _Enter 15% of line 11 here and include in amount on line 23 below

Fill in your renewable energy source costs (but do not Include repair or maintenance costs)

13 a Solar_______|_ 13b Geothermal | 13¢ Wind ! Total >

14 Enter the part of expenditures made from nontaxable government grants and subsidized financing .
15 Subtract line 14 from line 13d .

16 ~=Maximum amount of cost on which the credit c can be ‘figured

$10,000] 00

17 Enter the total renewable energy source costs for this residence. Add line 5 of your 1978 Form 5695,
line 9 of your 1979 and 1980 Forms 5695, and line 13d of your 1981, 1982, 1983, and 1984 Forms 5695

18 Subtract line 17 from line 16. If line 17 exceeds line 16, enter zero here and on line 22

19 Enter the nontaxable grants and subsidized financing shown on line 14 of this form .

20 Subtract line 19 from line 18. If zero or less, do not complete the rest of Part II

21 Enter the amount on line 15 or line 20, whichever is less

22 __ Enter 40% of line 21 here and include in amount on line 23 below

iceay Fill in this part to figure the limitation.

23 Add lines 12 and 22. If less than $10, enter zero .
24 ~~ Enter your energy credit carryover from a previous tax year. Caution—Do not make an entry on n this line

if your 1984 Form 1040, line 49, showed an amount of more than zero.
25 = Addlines 23 and 24 .

26 Enter the amount of tax shown on Form 1040, “ine 40.

27 Add lines 41, 42, and 44 from Form 1040 and enter the total .

28 Subtract line 27 from line 26. If zero or less, enter zero .

29 Residential energy credit. Enter the amount on line 25 or line 28, whichever i is less. if less than $10,
enter zero. Also, enter this amount on Form 1040, line 43. Complete Part IV below if this line is less than
line 25

Part IV BG) this part to figure your carryover to 1986 ‘(complete only if Tine 291 is 5 less than Tine 25).

30 Enter amount from Part Ill, line 25

31° Enter amount from Part Ill, line 29

32__ Credit carryover to 1986 (subtract line 31 from line 30).



General Instructions

Paperwork Reduction Act Notice.—We ask for
this information to carry out the Internal Revenue
laws of the United States. We need it to ensure
that taxpayers are complying with these laws and
to allow us to figure and collect the right amount
of tax. You are required to give us this
information.

‘A Change You Should Note.— 1985 is the last
year that expenditures made for energy saving
items will qualify for the residential energy credit,
and no carryforward will be allowed for taxable
years beginning after December 31, 1987.
Purpose of Form.—Use this form to figure your
residential energy credit if you had qualified
energy saving items installed in your principal
residence. The instructions below list conditions
you must meet to take the credit. If you have an
energy credit carryover from the previous tax year
and no energy saving costs this year, skip to Part
Illof the form. Attach Form 5695 to your tax
return. For more information, please get
Publication 903, Energy Credits for Individuals.

Two energy credits make up the residential
energy credit, each with its own conditions and
limits. These credits are based on: (1) Costs for
home energy conservation; and (2) Costs for
renewable energy source property.

The credit is based on the cost of items
installed in your principal residence after April
19, 1977, and before January 1, 1986.

What Is Your Principal Residence?—To qualify
as your principal residence, your residence must
be the home in the United States where you live
(you may own it or rent it from another person).

A summer or vacation home does not qualify.

Special Rules.—if you live in a condominium,
cooperative apartment, occupy a dwelling unit
jointly, or share the cost of energy property, see
Publication 903 for more details.

What Are Energy Saving Items?—You can take
the credit for energy conservation and renewable
energy source items.

Energy conservation items are limited to:

© insulation (fiberglass, cellulose, etc.) for
ceilings, walls, floors, roofs, water heaters,
ete.;

© storm (or thermal) windows or doors for
the outside of your residence;

© caulking or weatherstripping for windows
or doors for the outside of your residence;

© a replacement burner for your existing
furnace that reduces fuel use. The burner
must replace an existing burner. It does not
qualify if it is acquired as a component of, or
for use in, a new furnace or boiler;
© a device for modifying flue openings to
make a heating system more efficient;
© an electrical or mechanical furnace ignition
system that replaces a gas pilot light;
© a thermostat with an automatic setback;
© ameter that shows the cost of energy
used.
To take the credit for an energy conservation
item, you must:

@ install the item in your principal residence

which was substantially completed before

April 20, 1977;

© be the first one to use the item; and

© expect it to last at least 3 years.

For energy conservation items, you may not

claim more than $300 ($2,000 x 15%)
accumulated credit for each principal residence.

Renewable energy source items include
solar, wind, and geothermal energy items that
heat or cool your principal residence or provide
hot water or electricity for it.

Examples of solar energy items that may
qualify include:

© collectors;

© rockbeds;

@ heat exchangers; and

© solar panels installed on roofs (including

those installed as a roof or part of a roof).

‘An example of an item that uses wind energy
isa windmill that produces energy in any form
(usually electricity) for your residence.

Geothermal energy property expenditures
must be made in connection with a “geothermal
deposit."” A geothermal deposit is one having a
temperature exceeding 50 degrees Celsius (122
degrees Fahrenheit) as measured at the
wellhead or in the case of a natural hot spring
(where no well is drilled), at the intake to the
distribution system. Generally , the qualifying
geothermal resources that are economically
recoverable are located in states west of the
Rocky Mountains (except for geothermal springs
located in Arkansas).

To take the credit for a renewable energy
source item, you must:

© be the first one to use the item; and
© expect it to last at least 5 years.

For renewable energy source items, you may
not claim more than $4,000 ($10,000 x 40%)
accumulated credit for each principal residence,

What Items Are NOT Eligible for the Energy
Credit?—Do not take credit for:

carpeting;
drapes;
wood paneling;
wood or peat-burning stoves;
hydrogen fueled residential equipment;
siding for the outside of your residence;
heat pumps (both air and water);
fluorescent replacement lighting systems;
replacement boilers and furnaces; and
swimming pools used to store energy.
Federal, State, or Local Government
Nontaxable Grants and Subsidized
Financing. — Qualified expenditures financed
with nontaxable Federal, state, or local
government grants cannot be used to figure the
energy credit. Also, if Federal, state, or local
government programs provide subsidized
financing for any part of qualified expenditures,
that part may not be used to figure the energy
credit, You must reduce the expenditure limits on
energy conservation and renewable energy
source property for a dwelling by the part of
expenditures financed by Federal, state, or local
government subsidized energy financing, as well
as by the amount of nontaxable Federal, state, or
local government grants used to purchase
conservation or renewable energy source
property.
Figuring the Credit for More Than One
Principal Residence.—You can take the
maximum credit for each principal residence you
live in. If you used all of your credit for one
residence in a prior year and then moved, you
may take the maximum credit on your next
residence. If you are claiming energy
conservation costs, your new principal residence
had to be substantially completed before April
20, 1977

To figure your 1985 energy credit for more
than one principal residence:

(1) Fill out Part lor Il on a separate Form
5695 for each principal residence;

(2) Enter the total of all parts on line 23 of
‘one of the forms;

(3) Inthe space above line 23, write "More
than one principal residence”; and

(4) Attach all forms to your return.

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Caution: You should keep a copy of each Form

5695 that you file for your records. For example,
if you sell your principal residence, you will need
to know the amount of the credit claimed in prior

tax years. If the items for which you took the
credit increased the basis of your principal
residence, you must reduce the basis by the
credit you took.

If the Credit Is More Than Your Tax.—If your
energy credit for this year is more than your tax
minus certain other credits, you may carry over
the excess energy credit to 1986. See A Change
You Should Note.

Specific Instructions

Part I, Line 1.—For energy conservation items
to qualify, your principal residence must have
been substantially completed before April 20,
1977. A dwelling unit is considered substantially
completed when it can be used as a personal
residence even though minor items remain un-
finished.

Lines 2a through 2h.—Enter your energy
conservation costs (including expenditures made
with nontaxable government grants and
subsidized financing) only for this tax year. Count
the cost of the item and its installation in or on
your principal residence. Do not include the cost
of repairs or maintenance for energy
conservation items.

Line 4.—Enter the amount of nontaxable
government grants and subsidized financing used
to purchase the energy items on lines 2a through
2h. If you do not know the amount, check with
the government agency that gave you the grant or
subsidized financing.

Line 7.—Enter your total energy conservation
costs from 1978, 1979, 1980, 1981, 1982,
1983, and 1984 for this principal residence. If
your total costs from these years exceed $2,000,
you may not claim any additional credit on this
residence. If you had energy conservation costs in
the previous tax year but could not take a credit
because it was less than $10, enter zero.

Line 9.—Enter the nontaxable government
grants and subsidized financing from line 4 that
you received under Federal, state, or local
programs to purchase energy items. You must
use the amounts received under these programs
to reduce the maximum amount of cost used to
figure the credit. Line 7 includes the nontaxable
government grants and subsidized financing you
received in prior years.

Part Il, Lines 13a through 13d.—Enter your
renewable energy source costs (including
expenditures made with nontaxable government
grants and subsidized financing) only for this tax
year. Do not include the cost of repairs or
maintenance for renewable energy source items.

Line 14.—See Part |, line 4 for an explanation.

Line 17.—Enter your total renewable energy
source costs from 1978, 1979, 1980, 1981,
1982, 1983, and 1984 for this principal
residence. If your total costs from these years
exceed $10,000, you may not claim any
additional credit on this residence. If you had
renewable energy source costs in the previous tax
year but could not take a credit because it was
less than $10, enter zero.

Line 19.—Enter the nontaxable government
grants and subsidized financing from line 14 that
you received under Federal, state, or local
programs to purchase energy items. You must
use the amounts received under these programs
to reduce the maximum amount of cost used to
figure the credit. Line 17 includes the nontaxable
government grants and subsidized financing you
received in prior years.

Part Ill, Line 24.—Generally, your energy credit
carryover will be computed on your prior year
Form 5695, Part IV. Exception—If the
alternative minimum tax applied, see
Publication 909, Alternative Minimum Tax.
Part IV.—Complete this part only if line 29 is
less than line 25. You can carry over the amount
entered on line 32 to your next tax year.