Dependent Care Tax Credit not working for self-employment

[sdkk1499]

I have a w-2, my wife has a sole proprietorship, so she files (we file jointly) within her personal taxes.  She is showing an income (revenue greater than expenses), but still TurboTax says we are not eligible.  It says that I entered less than $6000 of earned income for her.  This is not the case, her self-employment income is greater than that.

Can anyone provide any insight?

[DawnC]

Did you enter that your wife is the owner of the Schedule C?   It may be attached to your name instead of hers.   You can verify this in the Business Profile.   Did her business have net income on Line 31 of Schedule C?

[sdkk1499]

I don't understand the screenshot.  I am doing this in the online TurboTax.  I can click into "Business Summary" under the self-employed section and it lists her name as the "Who did this work".  Where can I find the form on the screenshot that you showed?

Thanks!

[SusanY1]

There are a few other things to check for the Schedule C, now that you've confirmed that it shows her name for "who did this work".  Make sure that her expenses do not exceed her income (or the credit won't be allowed). She must show a positive net profit (not zero or a loss). 

Also, double-check that the answer to "Did you actively participate in this work?" is answered yes for her as well.  

 

[sdkk1499]

Income is higher than expenses.  When I go through it, there is no spot for "did you actively participate in this work".  I am using the self-employed online version.  Should I be using something else?

I had to do K-1's for myself and for those I did get a question similar to "did you actively participate", but not for her.

[sdkk1499]

Okay, I did find that now, and it is checked.

[sdkk1499]

do I have to have the EIN submitted?

[Vanessa A]

No.  A sole proprietor does not have to have an EIN.  They file using their SSN. 

What is her Net profit?  Did you enter expenses for her yet?  Her net profit would be found on Schedule 1 line 3.  

You can preview your 1040 to see this.

1. From the left rail menu in TurboTax Online, select Tax Tools (You may have to scroll down on the left rail menu.)
2. Select Tax Tools 
   
3. On the drop-down select Tools 
4. On the pop-up menu titled “Tools Center”, select View Tax Summary 
5. On the left sidebar, select Preview my 1040 

[sdkk1499]

Thank you.  It says 6041 (not negative), so it seems it should work, but it does not

Also thanks for pointing out some of these other interesting capabilities.

[KrisD15]

You must subtract her self-employment tax from her income.

So Schedule 1 line 3 less Schedule 1  line 15. 

[VolvoGirl]

Technically you need to subtract 1/2 of the self employment tax.  The self employment tax on $6,041 is $854.   So half of 854 is  427.   Then 6041-427=5,614 which is less than 6,000.

You pay Self Employment tax (Scheduled SE) on a Net Profit of $400 or more on Schedule C in addition to regular income tax on it.   You pay 15.3% SE tax on 92.35% of your Net Profit (If it is greater than $400).  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  

[sdkk1499]

Thanks!  That now works, though my understanding was that any net income would qualify for this tax credit if the joint income was sufficient.