Why am I not eligible for child/dependent care credit this year?

[rebecchina]

For some reason TurboTax is saying I'm ineligible for a credit I've claimed for many years. We file jointly and both have taxable income but it's not even allowing us to enter information for our childcare expenses. 

[xmasbaby0]

CHILD AND DEPENDENT CARE CREDIT

You will not get the childcare credit until (unless) you enter income earned from working.   The credit does not work unless you enter your income first.   If you are filing a joint return you must show income for both spouses, or show that one or both of you was a student or disabled.   If you have self-employment income and show a loss you will not get the childcare credit.  You will not get the credit if you are filing married filing separately.  

If you have entered all of your income and you have entered your dependent(s) then work on the childcare credit by entering the Tax ID or Social Security number of your childcare provider and enter the amount you paid for the childcare.

One of the most common mistakes that messes up the childcare credit for people is listing all of the earned income under only one name on a joint return.  Make very sure that your incomes are listed under each of your names.  It’s pretty easy to check.  Go to the Income section, and click “update” on Wages and Salary.  That will take you to the W-2 Summary.  Do you see income listed under both of your names? 

 The person receiving the care had to be 12 or under or qualified as mentally or physically disabled. To claim the childcare credit you need to be filing as Head of Household or Married Filing Jointly. (NOT married filing separately)

 If your child was born in 2023 make sure you say the child lived with you all year. The credit is a percentage of your expenses based on your AGI (the higher the income, the lower the percentage)  You must provide the Social Security number for each child you are claiming, and the Social Security number or Tax ID for each care provider. 

In the case of divorced or never-married parents—only the custodial parent can use the childcare credit.

And remember that the childcare credit is a NON-refundable credit.  It can reduce your tax owed down to zero, but it is not added to your refund.

https://ttlc.intuit.com/questions/1900643-what-is-the-child-and-dependent-care-credit

[rebecchina]

Both of us have income - my husband a W2 and I have self-employment income, which didn't operate at a loss. What's strange is when I click that we had dependent care expenses it give us the option for "student" or "disabled" or "none of the above" - neither applies, but we do both have income! Again, I have deducted these expenses every year for at least 7-8 years.

[xmasbaby0]

But....have you ENTERED all of that income already?  We see users start working on that credit sometimes before they have entered their income---and that will not work.

[rebecchina]

Yes. I entered all the income. Do you know if you have to earn a certain amount through self-employment in order to write off the childcare? Because I earned less last year than usual. Or, if your investment income was greater than your self-employment income, is that part of why I'm not eligible?

[VolvoGirl]

You might have entered the W2 or self employment  under the wrong name  so they are both assigned to the same person.  Delete the W2 and enter it again.  It thinks that one of you didn't have any income.  Are you sure the Schedule C shows a profit and not a loss on line 31?   

[rebecchina]

One strange thing I am seeing in the dependent information section: it says I have to review information on them but I've filled it all out and checked it a few times and that warning isn't going away.

[rebecchina]

I just figured it out! I needed to enter their DOBs in the info section, which was outstanding. And when I entered those, the credit kicked in and I'll prob be able to enter dependent care info. Thanks!

[rebecchina]

Btw it looks like I may operate at a loss with my own business since I deducted a large home improvement expense from my income. Does that mean I can't deduct childcare expenses?

[VolvoGirl · Accepted solution]

Sorry yes.  You need a Net Profit on schedule C.