First, be sure that you have indicated that your Schedule C business has employees. Then, if you are using the Home and Business version of TurboTax, follow these steps:
- While working in your Schedule C, click Update beside Business Expenses > Other Common Business Expenses.
- Find Employee Expenses in the list and click Start or Update.
- Click Start or Update beside Pension Plan Startup Costs.
- Enter an amount for your startup costs.
- Answer the questions about the number of employees and providing an auto-enrollment option.
- Answer the question about whether your plan qualifies for the Pension Startup Credit.
- Click Continue to exit this section.
Next, navigate away from your Schedule C and go back to the Business tab at the top of the screen. Then, follow these steps:
- Scroll to the Less Common Business Situations at the bottom of the screen.
- Click Start or Update beside Business Credits.
- Click Start or Update beside Pension Plans - Startup Costs, Auto-Enrollment...
- Go through any questions to complete Form 8881 which is now part of your return.
If you are using a version other than Home and Business, the steps are similar except there is no Business tab at the top of the screen. You will navigate to Wages and Income > Business Items > Business Deductions and Credits > Other Business Credits > Pension Plans - Startup Costs... for the input required for Form 8881.
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