CDCC and dependent care FSA if one spouse has a business with no sales

[roni1]

My wife works full time and I have a one-member LLC which does not yet generate money (no customers). Both kids are at daycare while I'm getting the biz off the ground.

Is my understanding correct that I can't claim the CDCC or even use a dependent care FSA because I'm not making money? Or is there an exception for early-stage businesses? What is the minimum my business must be making in order to claim these credits?

[Critter]

There is no exception to the rule, your business must show a profit to take the credit.

[DianeC958]

Yes, you are correct that you need to have some earned income in order to take the Child Tax Credit.

Earned income. Earned income includes wages, salaries, tips, other taxable employee compensation, and net
earnings from self-employment. A net loss from self-employment reduces earned income. Earned income also includes strike benefits and any disability pay you report as wages.

Since you are a more than 2% owner of your LLC you are not allowed to have a Flexible Spending Account. The Flexible Spending Account is made for employees of a business.

[Edited 03/16/20 5:53 am PST]

@roni1

[roni1]

Are you positive? According to publication 503, there is an "earned income test":

https://www.irs.gov/publications/p503

I know you're a tax expert according to your profile, so there is something I must be missing!

Also the FSA is through my wife's employer, not my own business.

[ColeenD3]

On Form 2441, there are lines asking for each spouse's income. It is based on the lower spouse's income. Your income is zero.

Form 2441

[Critter]

Even if you were looking for work you must still have earned income to take the credit ... read the line instructions: 

Lines 4 and 5
If filing jointly, figure your and your spouse's earned
income separately. Enter your earned income on line 4
and your spouse's earned income on line 5.
Earned income for figuring the credit generally includes
the following amounts.
1. The amount shown on Form 1040 or 1040-SR,
line 1; or Form 1040-NR, line 8; minus any amount:
a. Included for a scholarship or fellowship grant that
wasn't reported to you on a Form W-2,
b. Excluded as foreign earned income (including any
housing exclusion) on Form 2555, line 43,
c. Also reported on Schedule SE (Form 1040 or
1040-SR) because you were a member of the clergy or
you received $108.28 or more of church employee
income,
d. Received for work performed while an inmate in a
penal institution, or
e. Received as a pension or annuity from a
nonqualified deferred compensation plan or a
nongovernmental section 457(b) plan. This amount may
be reported in box 11 of Form W-2. If you received such
an amount but box 11 is blank, contact your employer for
the amount received as a pension or annuity.
2. The amount shown on Schedule SE, line 3, minus
any deduction you claim on Schedule 1 (Form 1040 or
1040-SR), line 14; or Form 1040-NR, line 27.

https://www.irs.gov/pub/irs-pdf/i2441.pdf