How To Claim Auto-Enrollment Credit (Form 8881, Part II) for solo 401k in TurboTax Online?

[user17731092137]

I spent an hour with customer support and the support couldn't figure out how to claim the 401K auto enrollment credit in TurboTax Online.  When I jump to form 8881 I see a screen that tells me I just need to add pension plan startup costs (see attached screenshot), but there's no way to do that from self-employed expenses.  There's no category for this expense and if I make it an "other" expense where I type my own, "Pension Plan Startup Cost" and various variants of that don't unlock form 8881.  I'm on the premium edition.

[PatriciaV]

To claim the Auto-Enrollment Credit in TurboTax Online, follow these steps:

1. Log into TurboTax and open your return.
2. Navigate to your Schedule C business.
3. Edit Business info to indicate that you pay W-2 employees.
4. Under Expenses >> Less Common, check the boxes for Employee Pension Plan and Employee pension plan startup costs.
5. Go to Employee Pension Plan, answer all questions about number of employees paid & eligibility.
6. Check box for Auto-enrollment.
7. Check Yes if plan is qualified for the credit.
8. Go to Employee Pension Plan startup costs and complete interview. Enter at least $1 for startup costs.
9. To complete the Pension Plan Startup Credit, go to Wages & Income Summary >> Other Business Situations >> Business Credits, and select Pension Plan Startup Costs.
10. Follow the prompts to confirm the Auto-Enrollment Credit.

[user17731092137]

Thank you for this!  I'm not sure what to enter on this screen?  I don't have any employees, it's just me.  I made more than $5000.  Do I consider myself an employee?  So should I put:

0 employees received $5K and 0 were eligible to participate?

     OR

1 employee received $5K and 1 was eligible to participate?

[user17731092137]

Also, I discovered a few things:

1. For the credit to apply, I had to search for form 8881 and jump to that form. As soon as I did the $500 credit lowered my federal taxes due.

2. I didn't need to add Pension Plan, just Pension Plan Startup Costs

3. It looks like I'm getting $501 of credits because I added the $1 for startup costs.  You can go back in and just change the $1 to $0 and it makes the fix in form 8881.

[PatriciaV]

Yes, you are an employee for the purposes of the auto-enrollment credit. If you wish to eliminate the $1, change the amount to something less than a dollar. 

[samklemz21]

Hi did this end up working for you? Would you mind sharing the steps it took?

previously I had to use TurboTax Desktop just because this feature was not available in online. If it is now available online, I will likely do my taxes online this year

[user17731092137]

Yes, it worked great!  Here's the steps I noted for myself for next year:

1. Log into TurboTax.

2. Navigate to your Schedule C business.

3. Edit Business info to indicate that you pay W-2 employees.

4. Under Expenses >> Less Common, check the boxes for Employee pension plan startup costs.

5. Go to Employee Pension Plan startup costs and answer questions:

   • Startup Cost $1

   • 1 employee received at least $5K compensation

   • 1 employee was eligible to participant in pension plan

   • Yes, eligible for auto-enrollment credit

   • No, not qualified for Pension Startup Credit

6. Go to Income Summary | Edit Business Credits | Update Pension Plans

7. Jump to form 8881 (using search), follow instructions

8. Pay for tax return so I can get PDF of latest return, search for Form 8881 and confirm everything looks good except the $1

9. Go back and edit startup costs, make it $0.

10. Re-generate PDF of latest return, search for form 8881, see $1 disappeared

[samklemz21]

Wow, this worked! Thank you so much. I was dreading using Desktop again this year. Is this the first year Online has allowed for this? Thanks again