Not allowing Child Care Credit

[Jan Man]

Both my husband and I have worked and earned income.  I have a income from a W-2 and he has income from three K-1s and also separate self-employment income.  His income is a gain in all instances.  It seems like TurboTax is not considering my husband's K-1s and self employment income as "earned income."  Is there something I have done wrong when entering his K-1s and self employment income?  

[RobertB4444]

His K-1s may not qualify as earned income.  It depends on the income sources in the K-1s and the classification that your husband has in the different partnerships.

@Jan Man 

[Jan Man]

Thanks for your reply.  He is General Partner or LLC Member-Manager.  He has reportables in box 14 of the K-1s.

[Jan Man]

Where do I assign the K-1s to my husband in TurboTax?  It seems like maybe TT is assigning them to me.

[RobertB4444]

Then that is definitely self-employment income.  

The credit has changed for 2022 back to what it was before the pandemic so it is not a refundable credit.  So it provides no benefit if your income is low and you don't owe any taxes or if your income is high and you have triggered the AMT.  Not sure if any of that applies to you but they're both possibilities.

Also, you should have been asked for all the details about the care provider that you used.  There should be an EIN and location away from your house and all of that.

@Jan Man 

[RobertB4444]

Right when you enter the K-1 into TurboTax it should ask you if this K-1 is for you or for your spouse.  Walk through each K-1 and make sure that you have toggled those to him.

@Jan Man 

[Jan Man]

AGI is currently showing $299k 

Taxable Income showing $261k

Currently owe taxes

I can see the K-1s are assigned to husband.

[AliciaP1]

It would be helpful to have a TurboTax ".tax2022" file that is experiencing this issue.

You can send us a “diagnostic” file that has your “numbers” but not your personal information.  If you would like to do this, here are the instructions: 

In TurboTax Online, go to the black panel on the left side of your program and select Tax Tools. 

1. Then select Tools below Tax Tools. 
2. A window will pop up which says Tools Center.  
3. On this screen, select Share my file with Agent. 
4. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number. 

In TurboTax CD/Download versions, go to the black panel on the top of your screen and select Online. 

1. Scroll down to and select Send tax file to Agent. 
2. You will see a message explaining what the diagnostic copy is.  Click send through this screen and then you will get a Token number. 

Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.   

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

@Jan Man 

[Jan Man]

1128569

[AliciaP1]

Upon review, I cannot find that you have entered the information for the facility or person you paid dependent care expenses to.  You need to complete the Child and Dependent Care Credit section within the Deductions and Credits section of TurboTax.  You also need to verify your W2 entries and if there is not an amount paid through employment to a dependent care savings plan, it should not be showing as $0, but the code should be removed and left blank.

@Jan Man  

[Jan Man]

Thanks for your reply.  I will check the W-2.  In TurboTax, I am not able to get to the screen to enter the Child Care facility information as it automatically disqualifies us.

[Jan Man]

I removed the $0 from the W2 entry and left it blank.  

I went back to the Child Care Credit screen, it asked if I had relevant expenses, and I said yes.  Then it brought me to the check box screen, asking if we were students or disabled.  I said no to both for both of us.  It then took me to the disqualified screen.

Not sure what else could be wrong.

[AliciaP1 · Accepted solution]

Because the Schedule K-1s all are reporting box 14 income with code C, you need to mark the Nonfarm Optional method to calculate self-employment tax as Yes for each Schedule K-1.

You can get to the section to enter a Partnership K-1 in TurboTax Online by following these steps:

1. Sign in to your TurboTax
2. Open or continue  your return
   • Choose a section from the TurboTax menu and select Pick up where you left off
3. Using the search bar, type K-1 and select the Jump to link from the search results
   • Note: If the Jump to link doesn’t work, select the Federal tab, then under S-corps, Partnerships, and Trusts, select Wages & Income
   • Select Revisit or Start next to Schedule K-1
4. Answer Yes to Do you want to review Schedules K-1 or Q? and follow the prompts
5. This will take you to the Schedules K-1 or Q screen
6. Continue to the Nonfarm Optional Method screen and mark Yes
7. Repeat for the other two Schedules K-1
8. Then revisit the Child and Dependent Care Credit section to enter the details for the credit

To enter in TurboTax CD/Download:

1. Sign in to your TurboTax
2. Open or continue  your return
3. Using the search bar, type K-1 and select the Jump to link in the search results
4. This will take you to the Schedule K-1 and Schedule Q screen
   • Note: If the Jump to link doesn’t work, select Personal, then Personal Income
5. Select I’ll choose what I work on and continue until you reach the screen, Your 2022 Income Summary
6. Select Start next to Schedule K-1 under Business Investment and Estate/Trust Income
7. Answer Yes and follow the prompts
8. Continue to the Nonfarm Optional Method screen and mark Yes
9. Repeat for the other two Schedules K-1
10. Then revisit the Child and Dependent Care Credit section to enter the details for the credit

@Jan Man