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

SOLVEDby Intuit38Updated 2 weeks 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 module.

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. Form 1120S and 1065 filers that require Form 3800 may want to consider filing extensions.

New for tax year 2023:

  • Pre-filing registration requirement. If you intend to make an elective payment election and/or a transfer election on Form 3800, you must complete a pre-filing registration before you file your tax return.
  • Elective payment election. Beginning with tax year 2023, certain applicable entities and electing taxpayers can elect to treat certain IRA 2022 business credits as elective payments. Certain eligible taxpayers can elect to treat CHIPS 2022 credits as elective payments. Any overpayments may result in refunds.
  • Transferring credits. Taxpayers may make an election to transfer all or a portion of certain IRA 2022 credits.
  • See IRS instructions for 3800 for more information.

To enter amounts for Form 8881 in a Corporate return:

  1. Go to Screen 28 on the left panel.
  2. Select the section Credit for Small Employer Pension Plan Startup Costs and Auto-Enrollment (8881) from the lower left section menu.
  3. Enter the applicable information.

To enter amounts for Form 8881 in a Partnership return:

  1. Go to Screen 20, Credits.
  2. Select Other Credits from the top-left section menu.
  3. Scroll down to the section Small Employer Pension Plan Startup Costs and Auto-Enrollment Credit (Form 8881).
    • You can also select this section on the bottom left panel to jump directly to it.
  4. Enter the applicable information.

To enter amounts for Form 8881 in an Individual return:

  1. Go to Screen 34, General Bus. & Passive Act. Credits.
  2. Scroll down to the Other General Business Credits section.
  3. Locate the Credit for Small Employer Pension Plan Startup Costs and Auto-Enrollment subsection.
  4. Enter the Qualified startup costs (8881 Part 1).
  5. Enter any other applicable fields in this section.

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