I own a small business. I paid someone go watch my children. Why don't I qualify for the Child Dependent Care Credit?

Forum|Forum|3 years ago
January 24, 2023
3 replies
15 views

I paid my friend 6,000 to watch my 2 kids for the entire year.

TurboTax Live Self Employed

MichaelG81

Level 7

Yes, you can claim the expenses. However, you would need to report this as income for whoever watched your child and they would have to report as income on their tax return. You would need full name, their address, and SSN or EIN and give them their tax forms by a particular date depending on form W2, 1099-NEC, etc. If they watched the children at your home they could be a household employee meaning you would have deduct/pay taxes from their checks and remit to the IRS. Here is a link to an article explaining about childcare expenses it is very informative.

Publication 503 Child and Dependent Care IRS

@jjspencer822

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jjspencer822Author

Level 2

Yes I know that I can claim it. I entered all the information stated, including the persons social and at the end it said I don't qualify for the credit. I'm asking what can cause you not to qualify for the credit.

VolvoGirl

Level 15

Do you have any earned income? You need a Net Profit on schedule C for self employment to count as earned income. Do you have a loss?

Check out this help FAQ
https://ttlc.intuit.com/community/credits-and-deductions/help/what-is-the-child-and-dependent-care-credit/00/25907

Are you married? You both have to have earned income. You can't get it if you file separately unless you qualify for Head of Household. Have you entered all your income? If you are married check if the income is entered under the right spouse's name.