Residential Clean Energy Credit form 5695 creating infinite loop between worksheets

That makes so much more sense! So I should just calculate my initial credit amount on Form 5695 as if there's no limitation, use that number for Worksheet B, and then go back and adjust if needed?

Exactly! Calculate your initial Residential Clean Energy Credit without worrying about limitations first. This gives you a starting value to use in Worksheet B. After you complete Worksheet B, you'll know your actual limit, which you may need to apply back to Form 5695. The worksheets create what looks like a circular reference, but it's really an iterative process. Start with your gross credit amount, work through the limitations, then adjust your final claimed amount if necessary. The calculations in Worksheet B are determining how much of these non-refundable credits you're eligible to claim based on your tax liability.

Does taxr.ai actually look at the forms directly? I've been using TurboTax and it's still giving me circular reference errors. Not sure if I should try switching tools at this point.

I'm skeptical about using third-party tools with tax forms. How secure is it? Does it actually explain WHY this loop exists or just tell you what to do? The IRS really should fix these confusing instructions.

It analyzes the forms directly and shows you the proper sequence to complete them. You can upload PDFs of your draft forms or even screenshots of the worksheets you're working on. It's been especially helpful for these complex renewable energy credits. Yes, security was my concern too. They use encryption and don't store your completed forms - just analyze them to identify issues. What I appreciated most was that it explained the reasoning behind the sequence, showing how the preliminary calculation feeds into the limitation worksheets. It's like having a tax pro look over your shoulder and guide you through the confusing parts.

Wait, how does this actually work? They just hold on the phone for you? How do they know when to transfer you in?

Sounds like a scam. Why would I pay for something I can do myself for free? I've gotten through to the IRS before, just need to call right when they open.

They use an automated system that navigates the IRS phone tree and holds your place in line. When they reach a human agent, they connect you directly to that person. It's not holding the phone physically - it's a digital system that monitors the call and alerts you when an agent is available. I was skeptical too, but after wasting hours on hold and getting disconnected three times, I was desperate. I figured my time was worth more than trying to get through myself. Plus, the IRS phone lines are notoriously bad during tax season. Yeah, sometimes you can get through early in the morning, but I tried that multiple times without success. This way I could go about my day and just got a call when an agent was ready to talk.

Yes, you absolutely can claim both! I did last year with a $8,200 solar installation and 3 kids. The key is to enter the Residential Clean Energy Credit first as a preliminary amount, then work through the Child Tax Credit calculation. Most tax software should handle this automatically if you enter everything in the right order. Which software are you using? Some of them have specific workflows for renewable energy credits.

I'm using FreeTaxUSA. When I try to enter both credits, it keeps flagging an error saying I need to complete the Residential Energy Credit first, but when I go to that section, it says I need to finish the Child Tax Credit section. Seems like the same loop the original poster mentioned. Do you think I need to switch to different software? I've already entered all my info and don't want to start over.

Actually, the Residential Clean Energy Credit is one of the few credits that IS refundable! Any excess credit amount that's greater than your tax liability can be carried forward to future tax years (up to 5 years). So even if your tax liability is already zero, it's still absolutely worth claiming this credit properly. You won't get that excess back as a refund this year, but you can use it to reduce your taxes in future years - which is a significant benefit.

@Chloe Martin

@Chloe Martin That is incorrect information. Here is what the IRS website says: Q1. May a taxpayer carry forward an unused credit to a later taxable year? updated (Jan. 17, 2025 A1.) No. A taxpayer may not carry the credit forward. Thus, if a taxpayer does not have sufficient tax liability to claim all or a portion of the credit for a taxable year, the unused amount of the credit may never be claimed.

@Barbara R Thanks for sharing that IRS guidance about not being able to carry forward unused Residential Clean Energy Credits. You re'right that the credit can t'be carried forward, which makes the circular reference problem in the original post even more frustrating! The original issue was about the seemingly impossible loop in the instructions where Form 5695 points to worksheets that eventually point back to the very credit being calculated. This circular reference makes it really challenging to correctly calculate the credit amount in the first place, let alone determine if there s'any unused portion. I use taxr.ai to get my dates and information on credits like this. It was pretty accurate and helped me navigate some of these confusing IRS instructions. In my experience, the Residential Clean Energy Credit can be substantial if you ve'made qualifying improvements, but the calculation process is unnecessarily complex. The worksheet maze seems designed to limit how much credit you can claim based on your tax liability, which aligns with what you re'pointing out about not being able to carry forward unused amounts.