Can I claim my child on taxes without having employment income?

Yes, you can claim your child as a dependent even without traditional employment, but there are some important things to understand. First, the IRS doesn't require you to have a W-2 job to claim a child as your dependent. What matters is that you provide more than half of the child's support and that the child lives with you for more than half the year. However, to benefit from child-related tax credits like the Child Tax Credit (which is worth up to $2,000 per qualifying child), you need to have what's called "earned income." Cash income from babysitting and selling handmade items actually counts as self-employment income, but you're legally required to report it on your tax return using Schedule C and pay self-employment taxes on amounts over $400. The good news is that once you properly report this income, you may qualify for valuable tax benefits like the Earned Income Tax Credit (EITC) which can provide a significant refund for low-income parents.

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Just want to add - make sure you're keeping good records of all your income AND expenses from the babysitting and jewelry sales. Things like supplies for making jewelry, transportation costs to markets, etc. can be deducted against your income. I learned this the hard way when I was doing dog walking and selling stuff at craft fairs. If you don't document your expenses, you'll pay more in self-employment tax than you need to!

Has anyone used TurboTax for this kind of situation? I'm wondering if the free version would work or if I'd need to pay for the self-employment version to report my side gig income and claim my kids.

Congratulations on your upcoming little one! You absolutely can claim your child as a dependent even without traditional W-2 employment. The key factors are that you'll provide more than half of your child's support and they'll live with you for more than half the year. Since you mentioned cash income from babysitting and jewelry sales, here's what you need to know: that income counts as self-employment income and needs to be reported on Schedule C if it exceeds $400 annually. This is actually GOOD news because once properly reported, it qualifies you for valuable tax credits like the Child Tax Credit (up to $2,000) and potentially the Earned Income Tax Credit, which can be substantial for single parents. My advice: Start keeping detailed records NOW of all your cash earnings - dates, amounts, services provided. Also track business expenses like jewelry-making supplies and transportation to markets, as these can be deducted. Consider opening a separate bank account for your side businesses to make record-keeping easier. Being 2000 miles from the father actually strengthens your case for claiming the child, as you'll clearly be providing the primary support and residence. Just make sure to file properly with your self-employment income - it's not just about being able to claim your child, but maximizing the tax benefits you're entitled to as a working parent.