Claiming tax credit for new plans

[Santo Gold]

The EGTRRA tax credit of up to $500 for the first 3 years of plan operation......Does anyone know exactly where (eg what line) this is reported at on the company's tax return? In this specific case, its a sole prop.

Thanks

[Lori Friedman]

For a Schedule C filer:

First, use Form 8881 (Credit for Small Employer Pension Plan Startup Costs) to compute the credit. The calculation is somewhat involved and considers other tax credits, the regular income tax, and the alternative minimum tax.

Second, carry the allowable credit to Form 1040, Line 54. Specify "Form 8881" in the blank space at Line 54c.