The income must be earned income to qualify for the child and dependent care credit. If this income is on a K-1:
If the K-1 is from a partnership (Form 1065), it will count as earned income if there is an entry in box 14 with code A net earnings from self-employment.
If this K-1 is from an S corporation (Form 1120S), then the corporation must have issued a W-2 as an employee for you to have earned income.
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