If the K-1 is from an S-Corp then Yes the owner needs to take a W-2 wage from the business.
If the business is a partnership (form 1065) then the amount that are considered wages show in Box 14 of the K-1 to be taxed for Social Security and Medicare.
If neither of these situations occurred for 2019 then your spouse is not showing any earned income which makes you ineligible for the Child Care Credit.
What is Earned Income?
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