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Entering Form 8881 credit for small employer pension plan startup costs in ProConnect Tax

SOLVEDby IntuitUpdated 1 month ago

This article will assist you with entering amounts for Form 8881, Credit for Small Employer Pension Plan Startup Costs. Follow the steps below for the applicable return.

What's new for Form 8881 for tax year 2023:

  • Increase in limit for the small employer pension plan startup costs credit. The Further Consolidated Appropriations Act, 2020, increased the credit limit for the credit for small employer pension plan startup costs.
  • New credit for small employer automatic enrollment in retirement savings. The Further Consolidated
    Appropriations Act, 2020, created a new credit for small employers with an auto-enrollment option for retirement savings.
  • Changes to the form. The title of Form 8881 is changed to Credit for Small Employer Pension Plan Startup Costs and Auto-Enrollment. In addition, the form now has two parts. Part I is used to claim the credit for small employer pension plan startup costs. Part II is used to claim the credit for small employer auto-enrollment in retirement savings.

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For tax year 2023, Form 3800 is undergoing a major IRS rewrite that expands the form to 8 pages. This form is still in development, pending a future release. Farmers, Fishers and Form 1120S and 1065 filers that require Form 3800 may want to consider filing extensions.

To enter amounts for Form 8881 in a Corporate return:

  1. From the Input Return tab, go to Credits  General Business Credits (3800).
  2. Click on the Employment tab.
  3. Scroll down on this screen to the Credit for Small Employer Pension Plan Startup Costs and Auto-Enrollment (8881) section.
  4. Make any applicable inputs in this section.

To enter amounts for Form 8881 in an S-Corporate return:

  1. From the Input Return tab, go to Schedule K  Credits Schedule K Credits.
  2. Click on the Employment tab.
  3. Scroll down to the Small Employer Pension Plan Startup Costs and Auto-Enrollment Credit (Form 8881).
  4. Make any applicable inputs in this section.

To enter amounts for Form 8881 in a Partnership return:

  1. From the Input Return tab, go to Schedule K  Credits Other Credits.
  2. Click on the Employment tab.
  3. Scroll down on this screen to the Small Employer Pension Plan Startup Costs and Auto-Enrollment Credit (8881) section.
  4. Make any applicable inputs in this section.

To enter amounts for Form 8881 in an Individual return:

  1. From the Input Return tab, go to Credits  General Business and Vehicle Cr.
  2. Click on the Other tab.
  3. Scroll down to the Credit for Small Employer Pension Plan Startup Costs and Auto-Enrollment subsection.
  4. Make any applicable inputs in this section.

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