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This is a confusing and somewhat difficult form to complete.
- Essentially you will need to complete lines 1 through 5.
- You need to read the actual form language to determine what to include in line 6
- No highly compensated employee contributions
- No contributions to employees that exceeded $1,000
- I would imagine in most cases, line 6 is zero and this will carry down to line 6g
- Line 7 is most likely zero as well since this would be amounts that are coming from an S corp or partnership; which I doubt is applicable to you
- At the end of the day, in running my simple hypothetical, with $5,000 on line 5 (40 employees), I also end up with $5,000 on line 8; since any contribution exceeded the $1,000 to my hypothetical employees.
- This amount then carries to the Schedule K, then the K-1 Box 13 code P; using the 2022 K-1 instructions since the 2023 instructions have not been released, however, I doubt they change for this issue.
- You will need to make sure that you add a good description so the recipient of the K-1 knows what the credit is so they can input it correctly for their tax return.
- Finally, remember you need to reduce your expense for any of the pension start-up costs by the amount of the credit; can't take both the full deduction AND the credit.
- Now back to polishing that new Lamborghini my wife gave me.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
