How to Deduct a Geothermal System on Taxes
- 1). Fill out Internal Revenue Service Form 5695 for Residential Energy Credits. The cost of a geothermal heat pump system is on Part 2, Line 15.
- 2). Check the box for Form 5695 on Form 1040, Line 52.
- 3). Transfer Form 5695, Part III, Line 29 to Line 52 on Form 1040. This line is the total amount of the non-business energy property credit determined in Part I, and the residential energy-efficient property credit determined in Part II.
- 4). File the tax return Form 1040 and Form 5695 with the IRS.