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?

Forum|Forum|11 months ago
April 15, 2025
2 replies
0 views

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

Employee

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.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

erin-lynn-mcintoshAuthor

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

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

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-mcintoshAuthor

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?