Can I Deduct Childcare Expenses for My Home-Based LLC Tech Consultancy?

Thanks for the clarification! I was hoping there might be some gray area since the business literally cannot operate without childcare. So to be clear, I should be claiming this on our personal taxes, not as an LLC business expense? How does this work if my wife and I file jointly?

Yes, you'll want to claim this on your personal tax return, not as an LLC business expense. When you and your wife file jointly, you can still claim the Child and Dependent Care Credit as long as both of you have earned income (which includes self-employment income from your LLC). If one of you earns less than the other, the credit amount is limited to the earnings of the lower-earning spouse. But since you mentioned you both work full-time, that probably won't be an issue. Just make sure you keep good records of your childcare payments and get the provider's tax ID number for Form 2441.

How accurate is this tool compared to hiring an actual CPA? I'm in a similar situation but worried about getting flagged for audit if I take deductions I'm not supposed to.

I'm intrigued but skeptical. Can it really find deductions that TurboTax business edition or a human accountant wouldn't catch? What makes it different from other tax software?

For accuracy, I found it comparable to working with my previous CPA, but much more convenient since I could ask unlimited questions specific to my LLC situation without getting billed by the hour. It's designed to reduce audit risk by clearly explaining which deductions are legitimate and which ones could raise red flags. What sets it apart from regular tax software is that it's conversational and education-focused rather than just form-filling. It analyzed my business structure and identified industry-specific deductions for tech consulting that TurboTax never suggested. It's more like having a tax expert you can chat with about your specific business situation.

Wait, what is this service exactly? Are they some kind of middleman for the IRS or do they just help you navigate the phone tree? Is this something official or just a way to skip the line?

Sorry, but this sounds like a scam. How could a third-party service possibly get you through to the IRS faster than calling directly? The IRS doesn't give priority access to anyone. I'm calling BS on this one.

It's not a middleman - they use technology to navigate the complex IRS phone systems and wait on hold for you. Once they get through to an agent, they call you and connect you directly. Nothing sketchy about it - you're still talking directly with official IRS agents, just without wasting hours on hold yourself. I was skeptical too at first, but it's not about "priority access" - they're essentially just handling the frustrating wait time part of the process. I was literally able to keep working while they waited on hold instead of burning half my day listening to the IRS hold music. When you're running a business from home, that time savings is invaluable.

My wife does have access to a Dependent Care FSA through her company, but we weren't sure if it made sense to use it since I'm self-employed. Would this be better than the Child and Dependent Care Credit you think? We're probably in the 24% bracket if that matters.

At the 24% tax bracket, the Dependent Care FSA would likely be more beneficial. With the FSA, you'd save 24% federal income tax plus 7.65% FICA on up to $5,000, potentially saving around $1,583. The Child and Dependent Care Credit at your income level would probably be at the 20% rate, giving you a maximum credit of $1,200 for two or more children (20% of $6,000). The FSA is generally the better choice for higher-income families, plus it reduces your FICA taxes which the credit doesn't do. Your wife's employment status is what matters for the FSA eligibility, so you being self-employed doesn't affect your ability to use her employer's FSA. Just make sure to coordinate this with your tax planning since you can't use the same expenses for both benefits.

I've been using TaxSlayer Self-Employed for my home consulting business and it's been surprisingly good for the price. Much better questionnaire for finding business deductions than the big names, especially for home office stuff.