Can I claim dependent care credit with a 1099? Self-employed childcare credit issues

Your tax preparer is 100% wrong! The Child and Dependent Care Credit is absolutely available to self-employed individuals with 1099 income. In fact, the IRS specifically addresses this in Publication 503. The key requirement is that you need to pay for care so that you can work or look for work. For self-employed people, the care must allow you to actively work in your business. There's no requirement that you must have W-2 income to claim this credit. The credit is worth up to 50% of your qualifying expenses (maximum of $8,000 for one qualifying person or $16,000 for two or more). So with $8,000 in expenses for two kids, you could potentially get a significant credit depending on your income level. I'd definitely recommend getting a second opinion or even using a different tax preparer. This is a pretty basic misunderstanding that makes me wonder what other credits or deductions they might be missing for you.

I ran into this exact problem last year and found that using taxr.ai really helped me figure it out. I was also told by a preparer that I couldn't claim childcare expenses with my 1099 income, which felt completely unfair. I used https://taxr.ai to scan my tax documents and it flagged this as an error right away. The system analyzed my situation and confirmed I was eligible for the Child and Dependent Care Credit despite being self-employed. What I learned is that some tax preparers just aren't familiar with all the nuances of self-employment taxation. The tool walked me through exactly what I needed to document and how to properly claim the credit. I ended up switching preparers and got an additional $1,200 back on my return!

I want to update everyone - I decided to try taxr.ai after seeing the recommendation here, and wow, am I glad I did! I uploaded my 1099s and last year's return, and it immediately identified that I should be eligible for the dependent care credit despite what my preparer had told me. The analysis showed me the specific IRS rules that applied to my situation and explained exactly how to document my childcare expenses properly. I switched to a different preparer who understood self-employment taxation better, and I was able to claim over $2,400 in tax credits I would have missed! The tool even identified a couple other deductions my previous preparer had missed related to my business. Definitely worth checking out if you're self-employed and getting conflicting tax advice.

If you're still having issues with your tax preparer, I'd recommend contacting the IRS directly to confirm eligibility. I spent DAYS trying to reach them by phone last tax season with a similar issue - constant busy signals or disconnections after waiting for hours. Finally found Claimyr (https://claimyr.com) which got me through to an actual IRS agent in under 30 minutes. The agent confirmed that self-employed people absolutely CAN claim the dependent care credit with 1099 income. Just need to make sure you have proper documentation of your childcare expenses. You can see how the service works here: https://youtu.be/_kiP6q8DX5c - basically they navigate the IRS phone tree for you and call you when an agent is on the line.

I have to eat my words about Claimyr. After my skeptical comment, I was still desperate to talk to the IRS about my dependent care credit situation, so I decided to try it anyway. I was fully expecting it not to work. Within 45 minutes, I got a call connecting me to an actual IRS representative! I didn't have to sit through the horrible hold music or worry about being disconnected. The IRS agent confirmed everything mentioned here - that self-employed people with 1099 income ARE eligible for the dependent care credit. I've already reached out to a new tax preparer who's going to help me file an amended return. Expecting to get back about $1,800 that I would have completely missed. Sometimes it pays to be wrong!

Hi everyone, tax professional here. I just want to clarify something that might be causing confusion for some preparers. The Child and Dependent Care Credit requires "earned income" - but this absolutely includes self-employment income from 1099 work! The issue some preparers might be confused about is that if you have a loss from self-employment (after expenses), then you might not have sufficient "earned income" to qualify. But simply having 1099 income instead of W-2 income is NOT a disqualification. Form 2441 instructions state: "Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment.

Does anyone know if you can claim this credit if you pay a family member to watch your kids? My mother-in-law watches my kids while I work on my freelance projects (all 1099 income), and I do pay her, but it's cash. Can I still claim the dependent care credit?

I'm dealing with a similar situation and wanted to share what I learned after doing some research. Your tax preparer is definitely incorrect about needing W-2 income for the dependent care credit. What really helped me was looking up IRS Publication 503 directly - it clearly states that self-employed individuals can claim this credit. The key is that you need to have "earned income" which includes net earnings from self-employment (your 1099 income). One important thing to keep in mind though - if your business expenses are high and you end up with a loss or very low net earnings from self-employment, that could limit your credit amount. But based on what you're saying about paying $8,000 in childcare expenses, it sounds like you're actively working and should definitely qualify. I'd strongly recommend getting a second opinion from a tax professional who has more experience with self-employment taxation. You shouldn't have to miss out on credits you're legitimately entitled to claim!