I made -6000 on a schedule C, and my wife made 120000. Isn't it true that my -6000 is still earned income? Do we qualify for the dependent care credit if filing jointly?

Forum|Forum|1 year ago
February 4, 2025
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I think i said I was unemployed somewhere earlier, but I had a startup that couldn't get customers.

Best answer by VolvoGirl

If you have a 6,000 Loss on schedule C you do not have any earned income. You both need earned income to get the Child Care Credit. Earned income is only W2 wages or a Net Profit on Schedule C.

DawnC

Profits from Schedule C are considered earned income for purposes of the credit. A net loss from self-employment reduces earned income. Here are the the requirements for the Dependent Care Credit -

You (and your spouse, if filing jointly) must have earned income.
- The earned income requirement for one spouse is waived if they were a full-time student or disabled (if they lived with the other spouse for more than 6 months in 2024).
You paid caregiving expenses so that you (and your spouse, if filing jointly) could work or look for work.
- The work/look-for work requirement for one spouse is waived if they were a full-time student or disabled (if they lived with the other spouse for more than 6 months in 2024).
You paid a caregiver to care for a Qualifying Person. The caregiver can't be:
- Your spouse.
- Your dependent.
- Your child if they were under 19 on the last day of 2024, even if not your dependent.
- The parent of the Qualifying Person, if the Qualifying Person is your child under the age of 13 during 2024.
Your filing status is not Married Filing Separately (except under certain circumstances).
You can provide the care provider's name, address, and their SSN, ITIN, or EIN on your return (unless it's a tax-exempt organization).

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hendlermanAuthor

This confirmed my understanding. In the software, the 2260 worksheet shows a correct earned income. However, when asked about child care tax credit, when marking that neither of us were full time students or needing assistance ourselves, the software says I am not eligible.

VolvoGirlAnswer

If you have a 6,000 Loss on schedule C you do not have any earned income. You both need earned income to get the Child Care Credit. Earned income is only W2 wages or a Net Profit on Schedule C.