Why You Shouldn’t Ignore IRS Form 5695
If you made energy-saving upgrades to your home — like attic insulation, duct sealing, or HVAC improvements — you may qualify for a federal tax credit. But to receive that credit, you must fill out IRS Form 5695: Residential Energy Credits.
At AtticShield, we help homeowners across Southern California boost energy efficiency through attic insulation, air sealing, and ductwork. But while we install the materials that may qualify for the tax credit, we are not CPAs or tax professionals. We cannot provide tax filing advice and are not responsible for the outcome of your tax return. Always consult a licensed tax preparer or accountant.
That said, we’re happy to provide this detailed homeowner-friendly guide to help you better understand how to fill out Form 5695 for the 2024 tax year (filed in 2025).
Section 1: What Is IRS Form 5695?
IRS Form 5695 is used to claim Residential Energy Credits, which reward homeowners who’ve invested in qualifying energy-efficient upgrades.
There Are Two Major Types of Credits Covered:
- Residential Clean Energy Credit (formerly Section 25D) – for solar panels, geothermal systems, etc.
- Energy Efficient Home Improvement Credit (Section 25C) – for items like insulation, air sealing, HVAC, windows, and doors.
Section 2: Do You Qualify for a Tax Credit?
To qualify, improvements must:
- Be made to your primary residence (not a rental or secondary home)
- Meet specific energy efficiency standards (e.g., ENERGY STAR certified or IECC-compliant)
- Be installed by January 1 – December 31, 2024
Here are examples of what AtticShield installs that typically qualify under the Energy Efficient Home Improvement Credit (25C):
- Blown-in fiberglass insulation
- Cellulose insulation
- Batt insulation (R-30 or higher)
- Air sealing (e.g., around attic hatches, ducts, and top plates)
- Duct sealing and replacement (if ENERGY STAR rated materials are used)
- Home energy audits (if performed and documented)
Section 3: Tax Credit Limits (Updated for 2024 Filing)
The Inflation Reduction Act of 2022 expanded and updated this credit, effective for tax years 2023–2032.
Here’s a breakdown of what’s eligible in 2024:
| Upgrade Type | Maximum Annual Credit | Notes |
|---|---|---|
| Insulation | 30% of material cost, up to $1,200 | Labor not included |
| Air Sealing | Part of $1,200 max | Includes caulking, foam, etc. |
| Energy Audit | $150 | Must be performed by certified professional |
| Doors | $250 per door / $500 max | Must meet ENERGY STAR standards |
| Windows | $600 | ENERGY STAR only |
| HVAC | Up to $2,000 | Includes heat pumps, central A/C, and furnaces if efficient |
You can stack credits up to $3,200 annually.
📄 Source – IRS Instructions for Form 5695 (2024)
Section 4: Step-by-Step – How to Fill Out IRS Form 5695
IRS Form 5695 is a two-part form. Most homeowners will only need to complete Part II, but we’ll explain both for completeness.
🔹 Part I – Residential Clean Energy Credit
This section is for:
- Solar panels
- Solar water heaters
- Wind turbines
- Geothermal systems
- Battery storage (new in 2023!)
If you only installed insulation, skip to Part II.
Line 1–5: Enter the cost of clean energy improvements. Include labor and materials.
Line 6: Add them up.
Line 7–12: These calculate your tax limitation — the amount you’re eligible to claim, based on your overall tax liability.
🔹 Part II – Energy Efficient Home Improvement Credit (Attic Insulation Goes Here)
Most of our customers will complete Lines 17–25.
Line 17: Energy Audit
If you had a certified home energy audit (not just an estimate), enter the amount paid. Maximum $150.
Line 18: Insulation Materials
Enter only the cost of insulation materials (no labor). This includes:
- Blown-in fiberglass or cellulose
- Rigid foam board
- Spray foam (if applicable — not recommended by AtticShield for most homes)
- Vapor barriers
💡 Example:
If your invoice from AtticShield was $3,500 and material cost was $1,200, enter $1,200.
Line 19: Energy-Efficient Doors (Skip if not applicable)
Maximum credit: $250 per door, $500 annually.
Line 20: Energy-Efficient Windows
Enter up to $600 for qualified windows or skylights.
Line 21: Other Qualified Energy Efficiency Improvements
Use this for air sealing materials, attic hatches, duct mastic, or weather stripping.
Line 22: HVAC & Hot Water Systems
If AtticShield or another contractor installed high-efficiency HVAC equipment, include material and labor here.
Line 23: Add Lines 17–22
This is your total qualifying improvement cost for the year (up to allowed maximums).
Line 24: Tax Limitation
This is the amount of tax you owe. You cannot claim more credit than you owe in federal taxes.
Line 25: Final Credit
Enter the smaller of Line 23 or Line 24. This is your total Energy Efficient Home Improvement Credit. Transfer to:
- Schedule 3 (Form 1040), Line 5
Section 5: How AtticShield Helps You Get the Credit
While AtticShield does not offer tax filing services, we make it easy to claim your insulation credit by:
✅ Providing detailed invoices with separate line items for materials vs. labor
✅ Including product details like R-values and materials used
✅ Offering before-and-after photos and service documentation
✅ Ensuring all materials meet IECC and ENERGY STAR guidelines
Section 6: Where to Find IRS Resources & Instructions
Need official links or forms? Here’s where to go:
- Download IRS Form 5695 (PDF)
- Form 5695 Instructions
- IRS Home Energy Credits Guide
- Energy Star List of Qualified Products
- IRS Form 1040 and Schedule 3
Section 7: Example Scenario
Let’s say a San Diego homeowner hires AtticShield to install new attic insulation and seal air leaks.
- Total cost: $3,000
- Material cost: $1,300
- Air sealing materials: $250
- Energy audit: $150
IRS Form 5695 Breakdown:
- Line 17: $150
- Line 18: $1,300
- Line 21: $250
- Total Credit (Line 23): $1,700
- Tax owed (Line 24): $3,000
- Final Credit (Line 25): $1,700
They reduce their tax liability by $1,700, just for making their home more energy-efficient.
Section 8: Common Mistakes to Avoid
🔴 Claiming labor costs for insulation – Only material costs count under Section 25C.
🔴 Using wrong product types – Verify ENERGY STAR or IECC compliance before installation.
🔴 Skipping documentation – Keep receipts and manufacturer certifications for at least 3 years.
🔴 Overclaiming – Know your annual limits: $1,200 for general upgrades and $2,000 for HVAC.
Section 9: Disclaimer (Please Read)
AtticShield is not a licensed tax preparer, CPA, or financial advisor.
This blog post is for informational purposes only and should not be considered tax or legal advice.
You are responsible for filing your own taxes accurately. Always consult a qualified tax professional before submitting IRS Form 5695 or claiming energy-related tax credits.
Final Thoughts: Claim What You’re Owed — the Right Way
If you’ve recently had insulation or air sealing work completed, don’t leave money on the table. IRS Form 5695 is your key to unlocking valuable federal energy credits. With clear records, supporting documentation, and the help of a trusted tax preparer, you can reduce your tax bill while improving your home’s comfort and energy performance.
Need Help With Insulation — Not Taxes?
AtticShield offers energy-efficient insulation solutions across San Diego County, Temecula, Lake Elsinore, and surrounding areas. While we don’t offer tax filing services, we do provide:
✅ Fully documented invoices
✅ Energy-efficient materials that meet IRS standards
✅ High-quality service from licensed insulation experts
📞 Call Now for a Free Estimate: 858-402-0066
🌐 Book Online at www.atticshield.com
📍 Proudly Serving Southern California Homes
Read more:
