TurboTax alerts users of problems with some residential energy tax credit claims

October 31, 2024

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Here’s a subject line you never want to see in your email box: There’s a problem with your tax return.

But that is what’s happening to some taxpayers.

No, it wasn’t from the Internal Revenue Service. Uncle Sam snail mails you a tax notice with questions about your filing.

Rather, it was an email from TurboTax to its users with the subject line —

CRITICAL NOTICE: Regarding your 2023 TurboTax return

And here’s the message —

Hi there,

We’re contacting you because there might be an issue with the accuracy of your 2023 tax return. Due to a TurboTax error, some customers might have overpaid their federal, and if applicable, state taxes.

You’ll need to amend your tax return if you’re claiming the Residential Clean Energy Credit on your second home. Please follow the steps detailed in this article: How do I amend my 2023 tax return to claim the Residential Clean Energy Credit? [Story link removed.]

If you do need to amend your tax return, we’ll refund you $60 to cover the cost of our TurboTax CD/Download product.* No need to call and request the refund. Your refund will automatically be applied to the same payment method you used to pay for TurboTax.

TurboTax experts are available to answer your questions at 844-333-2161 (Monday–Friday, 5 AM to 5 PM PT). When you speak with an expert, just mention 2023 Residential Energy Credit on Second Home so they know exactly what you’re calling about.

We truly apologize for any inconvenience this might have caused and want to thank you for being part of the TurboTax family.

Warm regards,
The TurboTax Team

At least the issues is an overpayment. It’s worth filing Form 1040-X to get back your money.

Refunds delivery options: As for more money, the asterisk in the email leads to more information in following note about a refund if you have to download more software from the company to amend you erroneous return.

TurboTax says the refund will be applied to the same payment method you used to pay for the Intuit tax software, usually within two to three week.

If you paid for TurboTax using the company’s Refund Processing Service, or purchased it through a third party vendor, the company says it will mail you a check within 21 days.

People who used any version of TurboTax should have received this email. Those who signed up for texts from the company also should get a message urging them to look for the email.

So, if you’re a TurboTax customer, double check your inbox or spam folder. Then double check your return.

Recurring residential energy tax credit problems: I’m not focusing on this TurboTax error just to pick on the tax software company. No person or product is perfect. And the company is reaching out to customers so they can correct any filing error.

But it is interesting that the residential energy credit problem that popped up a couple of weeks after the extended filing deadline also was an issue for TurboTax filers earlier this year.

As software users tried to complete and file their 2023 tax returns in January, those who wanted to claim the tax break for making home energy efficient improvements per the Inflation Reduction Act changes ran into a form roadblock.

First, Form 5695, Residential Energy Credits, wasn’t available. Then users found problems with it.

One TurboTax community board poster captured the mood of his fellow software users in the same stalled tax boat:

Is Form 5695 ever going to be corrected in TurboTax? The IRS has had the updated form on their website for weeks. Yet the TurboTax form still has an erroneous "Smart Worksheet" for Line 18 that imposes a lifetime limit, which is NOT the law for this year. And Line 18 on the form is correctly the line for Insulation or air sealing material or system. So TurboTax has the updated form, but has not updated its worksheets and is erroneously denying credits.

The form finally was available to users on Feb. 8. But by then, early TurboTax filers who wanted to get their returns, including the claiming of this tax break, to the IRS early so they could get refunds were not happy.

“I think this year is going to be the year where TurboTax finally convinced me to stop using TurboTax,” said a user discussing Form 5695 issue on a Reddit forum.

Explore your filing options now: Again, I’m really not piling on the popular tax software. If TurboTax or one of the other tax preparation software programs has worked well for you over the years, great. Keep using it.

But its issues this year with a specific tax benefit is a good reminder that you, like the disgruntled Reddit poster, might want to reassess how you do your taxes. And now, with the 2025 filing season just two months away, is a good time to explore all your options.

Here are some other tax filing choices.

Free File will be back in 2025 (and beyond). The 2025 filing season participating companies will be announced in mid-to-early January. You can check out the tax software providers who were part of Free File this year for an idea of what they offered taxpayers eligible to use the no-cost tax preparation and electronic filing option.

Direct File, the IRS’ own tax prep and e-filing program, will be available in 2025 to qualifying taxpayers in 24 states. A dozen — Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming — were part of the Direct File pilot for the 2024 filing season. Next year, qualifying taxpayers in Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, and Wisconsin also will be able to use Direct File.

In addition to expanding geographically, the IRS also has enhanced Direct File offerings so that more taxpayers will be eligible to use it.

Finally, if you want more personal tax help, Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites also will be open across the United States next filing season. My post on VITA and TCE volunteers has more on how they can help.

And if it’s finally time to hire a tax professional, start your search now. Reputable tax pros’ client lists fill up quickly. My post on picking the perfect tax pro for your filing (and more) needs looks at the tax pro selection process.

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