How to Split $2000 Heat Pump EEHIC Credit on Form 5695 with Joint Occupancy?

I'm a tax preparer and have handled several similar situations with the EEHIC. When two unmarried people jointly pay for qualifying energy improvements to a home they both own and occupy, you can split the credit based on how much each person contributed. For Form 5695, each of you would complete your own form using your portion of the expenses. If you're splitting 50/50, and let's say the heat pump costs $7,000 total, you'd each claim $3,500 on your respective Form 5695. The 30% credit would calculate to $1,050 each (30% of $3,500), which is below the $2,000 cap. You'll each need to attach a statement to your tax return explaining the allocation. It doesn't need to be complex - just state something like: "I am allocating 50% of the qualifying energy efficient home improvement expenses for the property at [address] pursuant to my 50% ownership interest and financial contribution." Make sure to keep all receipts and proof of payment showing how much each of you contributed to the purchase.

I was in almost the exact same situation last year with my partner and our mini-split heat pump system. The whole process was confusing until I found taxr.ai (https://taxr.ai) which literally saved me hours of research and probably prevented a costly mistake. I uploaded our heat pump invoice and ownership documents, and it analyzed everything and told us exactly how to split the credit. It even generated the statement we needed to attach to our returns explaining our 50/50 split. The best part was it showed us how to maximize the credit based on our specific situation without raising audit flags. Our installation was around $8,500 and we each got about $1,275 back on our taxes. The system caught a detail about additional electrical work that qualified that we would have missed.

Following up on my question about taxr.ai - I decided to try it for our heat pump project and I'm really glad I did! The situation with my boyfriend putting in more cash upfront while I'm taking on more of the financing payments was more complicated than I thought tax-wise. The system walked me through exactly how to document our uneven contributions and showed me the right way to calculate each person's share based on the total economic outlay rather than just the initial payment. It even factored in the interest on the financed portion! The allocation statement it generated for us specifically addressed our financing situation, which apparently matters to the IRS. We're both getting the right amount of credit without either of us claiming too much. Definitely recommend if your situation isn't a simple 50/50 split.

If you're planning to call the IRS to confirm how to handle this situation, good luck getting through to a real person. I spent 3+ hours on hold trying to get clarification about Form 5695 for a similar situation last year. Eventually got disconnected. I ended up using Claimyr (https://claimyr.com) after seeing someone recommend it here. They somehow got me connected to an actual IRS agent in about 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent confirmed that we could split the credit based on our actual financial contribution (not necessarily 50/50) and explained exactly what documentation we needed to keep. Super helpful since the IRS website was vague about joint occupancy requirements for unmarried couples.

I need to apologize and correct myself. After calling out Claimyr as BS in my previous comment, I decided to try it myself for a different tax issue (not energy credits but related to some missing 1099 forms). I was completely wrong. The service actually worked exactly as described. They called me back when an IRS agent was on the line, and I got my questions answered in a single 15-minute call instead of the multiple hours I spent getting nowhere on previous attempts. For anyone handling split energy credits like the original poster, getting direct confirmation from the IRS about your specific situation might be worth it. The agent I spoke with explained that they look at actual financial contribution for these credits, and keeping good records of who paid what is more important than a perfect 50/50 split. They also confirmed that each person files their own Form 5695 for their portion of the expenses.

One thing nobody's mentioned yet - make sure your heat pump actually qualifies for the full credit! Not all systems do, even if they're marketed as "energy efficient." For the Inflation Reduction Act credits, look for heat pumps that meet the Consortium for Energy Efficiency's highest tier (CEE tier 2 or higher). The manufacturer should provide certification, and your installer should know which models qualify. Also, keep in mind that installation costs ARE included in the total eligible for the 30% credit, not just the equipment cost. So factor that in when you're calculating your potential credit.

Has anyone actually claimed this credit as unmarried co-owners yet? I'm wondering if the IRS software flags returns when two people claim credits for the same address. My accountant is worried we might both get audited if we split a heat pump credit.

I went through this exact situation last year with my partner for our heat pump installation. We're both on the deed and split the $8,200 cost 50/50. Here's what we learned from our tax preparer: Each person files their own Form 5695 with their portion of the expenses. So if you split $9,000 evenly, you'd each claim $4,500 on line 1 of Form 5695. The 30% credit calculates to $1,350 each, well under the $2,000 individual cap. The statement we attached was simple: "I am claiming 50% of the qualifying energy efficient home improvement expenses for the heat pump system installed at [our address] based on my 50% ownership interest and financial contribution totaling $4,500." Key things to remember: - Keep all receipts showing how much each person paid - Both statements should match (same percentages) - The $2,000 cap applies per taxpayer, not per property - Installation costs count toward the credit too We had no issues with our returns and both got our full credits. The IRS seems to handle joint occupancy situations fine as long as you're transparent about the split and have documentation.