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How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

I have a solo 401k and am trying to claim the $500 auto-enrollment credit in Part II (NOT the startup costs credit in Part I). Where do you claim this in Turbotax Home & Business? The only option I see is to claim the credit for startup costs (Part I).

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23 Replies
CatinaT1
Expert Alumni

How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

I would go into Forms Mode and pull the form up from there.

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How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

On a related note/error: 

 

On Home & Business MacOS: On form 8881, entry of $500 entered (not by me) on Part I line 4 that I cannot remove. I am trying to claim for my solo 401k under Part II which I checked.

 

I can't seem to figure out how to remove the entry on Part I line 4 which appears to be the issue on why my Federal and State returns keep getting rejected. It needs to be 0. I've tried manually going into forms- won't allow. I've tried Easy Steps and trying to go under Self-retirement tab, but it will not allow any changes when clicking update.

 

Please help Turbo Tax. It's after 3/6/24 when it was purported to be ready. (it's not)

How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

Click Forms: 8881: scroll down to Part II, Click Auto-Enroll for the $500 tax credit.

PatriciaV
Expert Alumni

How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

The default amount on Form 8881 Part I Line 4 is $500. If the amount on Line 3 is greater, then the amount on Line 4 will be increased. If the rest of Part I is left blank, the default number on Line 4 should not affect the e-filing of your return.

 

If this issue remains, please provide the exact text of the error/reject message you are receiving.

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How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

@PatriciaV F8881-002-01 - Form 8881, 'PensionPlanStartupCostsCrAmt' must have a non-zero value if an amount is entered.

PatriciaV
Expert Alumni

How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

Please clarify the following:

1. You have checked the YES box on Form 8881 Part II "Was an auto-enrollment option provided for employees?"

2. A credit was reported on Schedule K-1 either from Form 1120S Box 13 Code F, G or P or Form 1065 box 15 Code F, G or P.

 

If the box is checked, you must have a credit from a K-1 in order to resolve the form error. Uncheck the box if a credit doesn't exist.

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How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

@PatriciaV 

 

1. Yes, part II box checked on 8881. (Claiming $500 tax credit for auto enrollment for setting up my solo 401k). No employees which is why Part I is not applicable. 

2. No schedule K. Only schedule C. Solo Proprietorship. 

Returns still getting rejected efile. Already paid $25 to Turbo Tax for CA efile so sending by snail mail isn’t really any option-unless TT will provide refund but would really prefer efile. 

Mahalo. 

How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

@PatriciaV 

 

I see that Turbo Tax updated the SW and Form 8881, Part I $500 is now removed and the correct $0

 

However, I am now getting another error message:

 

F3800-497 - If Form 3800, 'GeneralBusCrFromNnPssvActyAmt' from 'Form8881PartIICYCreditsGrp' has a non-zero value and the corresponding column (d) 'PassThroughEntityEIN' does not have a value, then Form 8881 must be present in the return.

 

Form 3800 is suppose to pull Form 8881, Part II, $500 credit to Form 3800, DD- not "d" as in the error message. TT is getting there.

 

Mahalo, vf

JotikaT2
Employee Tax Expert

How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

It's hard to determine what is going on without being able to actually look at your return.  An option available is for you to provide a TurboTax ".tax2023" file to us that is experiencing this issue so we can take a look at your return.  This will help determine what the issue is and provide you with a solution. 

 

If this is something you'd like to do, and you are using TurboTax desktop, on your menu bar at the very top, click Online and then Send Tax File to Agent.  When you click to send, you will get a pop-up asking you if you want to send a diagnostic copy for an agent.  Select send and then you will get another popup with a token number.

 

If you are using TurboTax Online, select an income section on your return to pull up the Tax Tools option on the left side of the screen.  When you see Tax Tools, click on it.  You will then select Tools.  This will pull up a pop up box titled Tools Center.  In this box, select Share my file with Agent.  Click okay on the pop up informing you of what a diagnostic copy is.  You will then get a pop up box with a token number.   

 

Reply with the token number and we’ll be able to open a TurboTax file with your numbers but not your personal information. 

 

@calbear 

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How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

@JotikaT2 

1248173

JotikaT2
Employee Tax Expert

How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

Since this credit is applicable to a business with employees, I suggest editing your business information to reflect that you do have an employee since you have a solo 401(k).

 

  1. Log back into TurboTax and select the Business Tab.
  2. Select Edit to the right of Business info.
  3. Under the section asking if you have employees change your answer to yes from no.
  4. Proceed through the review and comment back if you are still getting an error message.

@calbear 

 

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How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

@JotikaT2 

 

There are no employees- it's a Solo401k for sole proprietorship. Part II is applicable since my solo401k has an an auto enrollment option.

 

The Self-Directed Solo 401k Auto Enrollment Tax Credit (aka Auto Contribution Arrangement) Continues...

 

So technically, this isn't correct.

How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

@JotikaT2 

 

Tried this and it was also rejected. (and not technically correct since there are no employees).

JotikaT2
Employee Tax Expert

How to Claim Small Employer Auto-Enrollment Credit (Form 8881, Part II) for solo 401k

There is another situation with this form that is currently being investigated.  The program is scheduled to be updated in about 2 weeks.  The errors you are getting when efiling may be resolved with this update.  I recommend trying then and if you are still getting the error message, please comment back.

 

Thank you for trying to the suggestion above.  Since answering the question yes would not affect your overall return, it was an attempted workaround to help you file.  

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