IRS Form 5695 is the form used to claim residential energy tax credits, including those for energy storage systems such as qualified battery storage technology. Specifically, for energy storage tax credits, the form applies to battery storage systems that meet certain criteria:
- The battery storage must have a capacity of at least 3 kilowatt hours (kWh) to qualify.
- The storage system must be installed in connection with a dwelling unit in the United States that is used as a residence by the taxpayer. Both principal residences and second homes are eligible, but rental properties do not qualify.
- The tax credit amount for battery storage is currently 30% of the cost for property placed in service after December 31, 2021, and before January 1, 2033, with decreasing percentages scheduled beyond that period.
Taxpayers use Form 5695 to claim this Residential Clean Energy Credit by reporting the costs of the eligible energy storage system and calculating 30% credit (or the applicable percentage based on the year) of those costs, which then reduces their federal tax liability.
In summary, the IRS Form 5695 applies to energy storage tax credits by enabling taxpayers to claim the Residential Clean Energy Credit for qualified battery storage systems meeting the 3 kWh minimum capacity requirement, applying a credit rate of generally 30% (adjusted by year) against the costs of the system installed at their residence.
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