Common questions on Form 8880 Retirement Saving Contribution Credit in Lacerte

• Lacerte will typically generate this credit automatically based on your IRA contribution entries in Screen 10, Wages, Salaries, Tips, Screen 13.1, Pensions, IRAs (1099-R), and Screen 24, Adjustments to Income.
• If your client meets all the conditions for the credit, but the form isn’t generating, make sure that your inputs are marked accurately as Taxpayer or Spouse. Additionally, if the credit is being reduced by a pension distribution on line 4, see Form 8880 Not Generating Credit Due to Pension Distributions in Lacerte.

How do I prevent Form 8880 from generating?

To suppress the taxpayer’s credit because the taxpayer was claimed as a dependent:

1. Open Screen 1, Client Information.
2. In the Section list, select Taxpayer Info.
3. In Dependency Status, select Taxpayer claimed as a dependent.

To suppress the credit because the taxpayer or spouse was a student (Option 1):

1. Open Screen 1, Client Information.
2. In the Section list, select Taxpayer or Spouse Information.
3. Type "Student" in Occupation.

To suppress the credit because the taxpayer or spouse was a student (Option 2):

1. Go to Screen 39, EIC, Elderly, Other Credits.
2. In the left Section list, select Retirement Savings Contributions Credit (8880).
3. Enter 1 in 1=student or dependent, 2=not a student [O].

To suppress the spouse’s credit because the spouse was claimed as a dependent:

1. Go to Screen 39, EIC, Elderly, Other Credits.
2. In the left Section list, select Retirement Savings Contributions Credit (8880).
3. Enter 1 in 1=student or dependent, 2=not a student [O].

Contribution to a Self-Employed SEP or SIMPLE and Form 8880

When a contribution is made to a Self-Employed SEP or SIMPLE retirement plan, the Form 8880 credit is not taken.  However, when the contribution is entered as a traditional IRA contribution, it is allowed.

Solution:

In general, SEP/SIMPLE contributions are not included on line 2. The instructions state:

Line 2

Include on line 2 any of the following amounts.

• Elective deferrals to a 401(k) or 403(b) plan (including designated Roth contributions under section 402A), or to a governmental 457, SEP, or SIMPLE plan.
• Voluntary employee contributions to a qualified retirement plan as defined in section 4974(c) (including the federal Thrift Savings Plan).
• Contributions to a 501(c)(18)(D) plan.

These amounts may be shown in box 12 of you Form(s) W-2 for 20YY.

Note.  Contributions designated under section 414(h)(2) are treated as company contributions and as such they are not voluntary contributions made by the employee.  They do not qualify for the credit and should not be included on line 2."

Use Total SE elective deferrals (except Roth) (1 = maximum) (codes 44, 94) in Screen 24,Adjustment to Income under the SEP, SIMPLE, Qualified Plans section to ge

Entering Individual Form 8880 Line 4 in Lacerte

To generate Form 8880, line 4:

1. Go to Screen 38.2, EIC, Residential Energy, Other Credits. (Screen 39 in 2013 and prior years.)
2. Scroll down to the Retirement Savings Contributions Credit (8880) section.
3. Enter the amount in Distribution from IRAs and elective deferral plans under the second prior year subsection. (if applicable)
4. Enter the amount in Distributions from IRAs and elective deferral plans under the first prior year subsection. (if applicable)
5. Enter the amount in Distributions from qualified plans received after 12/31/XX prior to due date of tax return. (if applicable)

The total of these three input fields will flow to Form 8880, line 4.

Note: According to the form instructions, dividends paid from Employee Stock Options Programs under section 404(k) are not to be included in line 4 on Form 8880.

An additional entry is required to tell Lacerte to exclude this 1099-R from form 8880:

1. Go to Screen 13.1, Pensions, IRA Distributions.
2. Scroll to the section Other Information.
3. Check the check box for Distribution not from IRA or elective deferral plan (8880).

Note:  The amount entered under the taxpayer column will also show in the spouse's column on Form 8880 and vice-versa, per the form instructions.

To show different amounts for Taxpayer and Spouse because the Taxpayer and Spouse did not file a joint return for the year the distribution was received:

1. Go to Screen 38.2, EIC, Residential Energy, Other Credits. (Screen 39 in 2013 and prior years.)
2. Scroll down to the Retirement Savings Contributions Credit (8880) section.
3. Enter the amount in, Distribution from IRAs and elective deferral plans under the second prior year subsection. (if applicable)
4. Check the box, Filing status in [second prior year] other than MFJ.
5. Enter the amount in, Distributions from IRAs and elective deferral plans under the first prior year subsection. (if applicable)
6. Check the box, Filing status in [first prior year] other than MFJ.

Form 8880 not generating credit due to pension distributions

Form 8880, Credit for Qualified Retirement Savings Contributions is not generating a credit due to a current year distribution.

If the taxpayer meets all the conditions, but distributions entered in the screen, Pensions, IRAs (1099-R), are being included on Form 8880, line 4 and have reduced or eliminated the amount of credit. According to the instructions for Form 8880, Credit for Qualified Retirement Saving Contributions, distributions that are not from a traditional or Roth IRA or an elective deferral plan should not be included.

Link to IRS Form 8880 Instructions:

http://www.irs.gov/pub/irs-pdf/f8880.pdf

Go to the screen, Pensions, IRAs (1099-R), and then scroll down to the Other Information section. Check the box,  Distribution not from IRA or elective deferral plan (8880), to exclude the gross distribution, including rollovers, on Form 8880, line 4.