I have a K1 from my business with income noted. It is farming income. TT is not recognizing that as earned income for Child Care Credit purposes. Why? How do I fix?

[erin-lynn-mcintosh]

I've paid myself modestly this year but was working fulltime. I paid a nanny and want to benefit from the child care credit but TurboTax is saying I do not have earned income.

[PatriciaV]

Did you indicate that you actively participate in the running of the farm? For Schedule K-1, this is often called "material participation." If you're not actively participating, the income is considered passive and doesn't qualify for the Child and Dependent Care Credit.

[AmeliesUncle]

Is the business a Partnership?  If so, is there a positive amount in box 14?

Or is the business an S-corporation?  If so, did the corporation give you a W-2 and did you enter that W-2?

[erin-lynn-mcintosh]

Yes, the business is a partnership and yes there is an amount in box 14 and it is positive. I also indicated that I actively participated in the business. I've got the worn dry hands and bad back to prove it, haha (jk).

But why would TurboTax not accept this info? The code is B for box 14, is that the problem?

[erin-lynn-mcintosh]

Hi, thanks for your reply. Yes I did indicate I actively participated in the business. And still was not allowed the credit. 

[AmeliesUncle]

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@erin-lynn-mcintosh wrote:

The code is B for box 14, is that the problem?

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Yes.  There isn't also a code "A"?

Did the business have a profit in Box 1?  Or Guaranteed Payments in Box 4?  Or if box 1 is a loss, is Box 4 larger than the loss in Box 1?

[Mike9241]

1065 instructions for 14B  self-employment under the farm optional method on Schedule SE (Form 1040), Part II.

However, thus may be inconsistent with the rules for the FOM.

see the instructions for Form 1040-SE

https://www.irs.gov/pub/irs-pdf/i1040sse.pdf