How to complete form 8881 for automatic participation feature tax credit?

[ramen dog]

Thank you, this is helpful. Unfortunately the Easy Step dialog is different for the Mac version and you cannot get to the point where you enter start-up costs unless you first report that you have employees. If you open form 8881 in the forms view, what appears on that form (what portions are filled out and with what values)?

[lac528]

@gpientka While I believe fees for Solo 401k plan admin are deductible, I don't think putting them as a "Pension Plan Startup Cost" is accurate. I was told those fees go as an expense on Schedule C. Putting in some Pension Plan Startup Cost is indeed a workaround that can then let you access the auto-enrollment credit screens in TurboTax. But most of us sole proprietors don't actually have anything that is realistically categorized as "Pension Plan Startup Costs". I guess claiming these Solo 401k fees are startup costs is one way to tweak things. At one point I played with claiming I had an employee and entering something in startup costs so I could access the auto-enrollment screens but then later going back and removing the employee and startup costs, but ultimately I don't think it worked properly at that time. In any case, I don't think it's actually appropriate to put Solo 401k admin fees there, but someone can correct me if I'm wrong. Also not sure where on the return it puts those fees if you enter them as startup costs. Sole proprietors don't qualify for the startup credit so if it's in any way affecting that, then it would be quite incorrect I think.

[DawnC]

Form 8881 is finalized in TurboTax @rn13 

[taxuser23459873245]

@ramen dog, @lac528 I'm also in the same boat and only want to fill out Part II of Form 8881. I'm also using the latest version of 2024 Home & Business Mac Edition.

I'm no tax expert and looking to get confirmation on this possible workaround. I have not submitted my return yet.

First off, to answer one concern that @ramen dog had regarding $500 appearing in Schedule 3 Part I 6a vs 6z, according to this video (https://streamyard.com/watch/S49rY8byCKVF, starts at 11:38), it seems like if you fill out Form 3800, it'll appear in 6a, and if not filled out, 6z. One of the guys in the video is from MySolo401k, so it seems credible.

I somewhat followed this person's workaround here: https://www.bogleheads.org/forum/viewtopic.php?p=8268623&sid=76582627bb045caa580c95c487a1a74c#p82686.... But in the Mac Edition, I did the following:

1. Updated the General Business Information and answered Yes to the question "Has Employees" (note: I switch this back to No later)

2. Under Business Expenses > Other Common Business Expenses, "Employee Expenses" now appears and I added an amount (ex: $1) to the Pension Startup Plan field (note: I zero this out later)

3. Under Less Common Business Situations > Business Credits > Pension plans - Startup Costs..., it now says I'm entitled to a tentative credit. At this point, Forms 8881 and 3000 appear in the Forms list.

4. For Form 8881, I filled in Part I, 7 to be 0.

5. Then I proceeded to undo the actions in steps 2 and 1 (in that order).

6. When I go back to Less Common Business Situations > Business Credits > Pension plans - Startup Costs..., it still says I have tentative credit.

7. Turbotax did not find any errors upon Review.

My Federal Tax Due is now -$500 less than what it was reporting before.

Is there anything in Schedule 3, Form 8881, 3800 that I should verify?

For Form 8881, "Enter the number of qualifying employees" is set to 0, 3 and 7 are set to 0. 1 and 2 are blank and I'm a bit concerned about those.

Let me know your thoughts.

[ramen dog]

@lac528 @taxuser23459873245  I was able to successfully claim the credit and e-file.  My return was accepted.  I never indicated that I had any employees or start-up costs.  I would be concerned, even if later going back to zero out those values, that TT would erroneously continue to include those forms in the filing (seen this issue before in other situations with TT).  Ultimately I followed the simple procedure that I outlined further up this thread by adding 8881 in forms view.  @taxuser23459873245 thank you for posting that video, it confirms that my forms 8881, 3800 and Schedule 3 all look good.  I even talked to George by email and he confirmed that other clients filed last year by filling out the form in forms view, but never referenced that video, good find! Good luck everyone, I will be crossing my fingers that freetaxUSA implements this credit for next year after this fiasco of no support from TT.

This is what worked for me, YMMV: 'In forms view, Use "Open Forms" to add form 8881 to your return.  Put zero in Part I line 7.  Check 'Yes' in Part II under "Credit for Auto Enrollment Smart Worksheet". $500 Credit appears in lines 9 & 11 as well as on Form 3800 Pt 3 lines dd, 2 & 6.  '

[taxuser23459873245]

@ramen dog @lac528 Happy to report that my return was also accepted. @ramen dog Thanks for providing your form info. It verifies with mine.

[MollyShr]

Thanks. This worked, and I did not have to read through many more pages to get to the end of the thread! You saved me!

[MollyShr]

There is no such All Other Expenses under Desktop TurboTax Home and Business. These directions, which were repeated several times, is not helpful.

[icici_e5d34644-8a23-4bed-a686-c5]

Hello Ramen Dog,

I am using web version of TurboTax to file taxes and claim $500 for MySolo401k credit.

Could you please help where can I find open forms view? Could you please elaborate bit more on the below comments, greatly appreciate your help !

Your comment: This is what worked for me, YMMV: 'In forms view, Use "Open Forms" to add form 8881 to your return.  Put zero in Part I line 7.  Check 'Yes' in Part II under "Credit for Auto Enrollment Smart Worksheet". $500 Credit appears in lines 9 & 11 as well as on Form 3800 Pt 3 lines dd, 2 & 6.  '

[PatriciaV]

Forms are available for direct entry only in TurboTax Desktop (installed on your personal computer). See this post for more help: How do I switch from TurboTax Online to the TurboTax software?

@icici_e5d34644-8a23-4bed-a686-c5 

[PatriciaV]

In TurboTax Home & Business, open your return and go to Business >> Business Income and Expenses >> "I'll choose what I work on."

1. Start/Update Profit or Loss from Business.
2. Edit the business you need to work on.
3. Under Business Expenses, Start/Update Other Common Business Expenses.
4. Start/Update Employee Expenses.
5. Start/Update Pension Plan Startup Costs.
6. Enter "Pension Plan Startup Costs" in the description box and enter the amount.
7. On the next page, check the "yes" box under "Did you provide an auto-enrollment option for retirement savings?"
8. On the page, "Is your pension plan qualified for the Pension Startup Credit?" check the "Yes" button.
9. The resulting message indicates you must go to Less Common Business Situations >> Business Credits >> Pension Plan Startup Costs to complete this credit.

@MollyShr