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@ramen dog This is my first year attempting to claim the credit. But I knew a long time ago that I would want to do it this year. So I started asking questions a long while ago last year to give myself and TurboTax lots of time to fix this. That's how long TurboTax has had to do something about this. You can see people complaining about this a year ago. Yet, apparently they did nothing, not even make it so we can at least do this in Forms mode and be certain it can e-file.
Unfortunately FreeTaxUSA does not support Form 8881 at all or I'd be using them too. This is not shocking since FreeTaxUSA is mostly for people with simpler tax situations and they do a great job for that. But for TurboTax, which is supposed to be able to handle sophisticated situations, it's really bad that they can't promise we can take this rather simple credit even in Forms mode and e-file.
I'm still holding out hope that @PatriciaV is wrong and we can just claim this credit in Forms mode and e-file. I thought people last year said they figured out how to make it work. But perhaps those people had startup costs too and for those who don't have startup costs, it won't work.
Since you're close to ready to try filing, I'm eager to hear what happens for you. Let us know all the details, especially if you are claiming Form 8881, Part II but have no startup costs, and if it goes through.
I tried to file today, after my previous comment on this thread. I used open forms to add the 500$ without adding startup cost.
When I got to the file part, turbotax tells me that form 8881 is not ready and that I should check for turbotax updates, and there are no updates, so there is no way to file right now when this form is added.
It doesn't seem like you would be able to file form 8881 currently even if there were startup costs, unless the message about needing an update is just super misleading.
@rn13 Did you do what's mentioned in the post below? If not, please try it and report back how that goes.
"it appears that the following workaround may allow people to submit their returns. In the limited testing I was able to do, this triggers Win TT (Desktop) to generate a Form 8881 in the PDF output. Without this, Form 8881 isn't generated.
So, go to "forms" mode, select Form 8881 and insert a "0" on line 7 of Part I. That's it.
FWIW, it appears other values in Part I will have the same result."
Yeah that is what I did, and the form does appear on the return. But where it is getting stuck is at the end during the check for problems before filing, it says something about form 8881 not being ready/finalized. But not that there is an issue with what I entered in the form, just that maybe they are expecting something to change about the form?
@rn13 Can I ask what you plan to do? I guess you can keep trying to talk to TurboTax support to see if they can help you get it past that error and e-file. But given the responses for the last year I suspect they won't help. As I mentioned, FreeTaxUSA doesn't support Form 8881 at all. So that is not an option. I'm very curious what you plan to do. This is so frustrating for all of us and we're all looking for answers.
In the other thread we have 2 confirmations from @calbear and @alex_k_21 that using the workaround of putting a 0 on Line 7, people were able to e-file with just the auto-enrollment credit on Form 8881 for 2023 taxes.
Yet here in this thread we have @PatriciaV saying TurboTax can't verify we can e-file. And we have @rn13 seeming to be unable to e-file.
What's happening here? Did TurboTax not only not fix this, but remove a workaround that used to work? Or does @rn13 have some other issue preventing e-filing?
crickets 🦗
@ramen dog I know. I'm still watching closely here to see whether people can e-file using the workaround. Multiple people have confirmed they were able to last year. So still hoping someone will post that they made it work this year. And hoping @PatriciaV will explain why multiple people successfully e-filed as sole proprietors and claimed the auto-enrollment credit on 2023 taxes, yet she is now saying we may not be able to for 2024. Did TurboTax actually undo the workaround that worked last year? What is the basis for her saying that? I know we'd all like some straight answers.
On 2/21/25 Turbotax completed / updated form 3800, which is where (on Form 3800 Pt 3 lines dd, 2 & 6 for sole proprietors) the credit from Form 8881 is entered. I can't yet be certain but I believe that is the reason why @rn13 had been unable to e-file previously.
@ramen dog This is the first year I qualify for the credit. Last year I was just trying to see if it worked because I knew I'd probably need to claim it this year. So I have never yet tried to e-file with this credit. This is year one for me. I'll be as interested as you to see what happens when you go to file. I'm sure you'll post here and let us know!
I was able to e-file with the desktop version. I purchased turbo tax online earlier, so I was offered a desktop version, but still, I have to pay $25 for state e-filing. How about next year? do I need to continue using the desktop version to get the remaining $1000 credit in the next two years? I am considering switching after using turbo taxes for 20 years or so. It is such an unpleasant experience. Hours were spent on how to fill out the forms, finding its bugs, and having to switch to the desktop version, talking to the support, and then having to pay more to file.
Time to push it on social media: https://tinyurl.com/dc74xdx3
@SeanD86 You were able to successfully e-file your 2024 taxes on TurboTax Desktop claiming the auto-enrollment credit (Form 8881, Part II) with no startup costs entered for Part I as a sole proprietor? Is that right?
If so, can you please post all the details? Which version of TurboTax did you get it to work on, what did you do on the forms, etc.? You're the only person so far that has gotten it to work so I know it would be very helpful for everyone to have as many details as you could share so we can follow in your footsteps!
I was using Desktop Turbo Tax Premier "WinPerRelease" Ver 308 which I updated after 2/20/25. I imported the data from turbo tax online when I installed the desktop version. On my 8881, I see the 0 at line 1, line 2, line 5, 6a, 6b, 6c, 6d. 250 for line 3, 500 on line 4, even I claimed no emplyee.( I had tired to enter having emplyee on TurboTax online so it could generate 8881 there) , 500 on 9 and 11. Line 7 was empty when I first efiled, it encountered an error, I forgot the error msg, and showed me a red 500 number on form 3880, the error msg didn't make sense to me, but pointed me towards line 7 on form 8881. After I entered 0 there, the error was gone and I could e-file. Hope this helps.
This year in the 2024 Turbotax Windows version (not online) under Business/Business Expenses/Other Common Business Expenses go to Employee Expenses, then Pension Plan Startup Costs. The description states "Pension plan startup costs include the expenses to: Establish an eligible employer plan, Administer an eligible employer plan, or Educate your employees..." I entered $125, which is the yearly admin fee for the solo 401K I have (mysolo401.net). After that it asks questions about the plan. Under "We need a little more info about ...startup costs" I clicked YES for "Did you provide and auto-enrollment option...". It then added the $500 tax credit on form 8881.
I didn't try this on the 2024 online version - maybe it works there?
Last year I used the Windows version and edited the PDF, adding form 8881. I couldn't submit the return electronically so I mailed it in.
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