Making a Child Care Tax Deduction as a Self-Employed Individual

While the child care tax deduction guidelines for employees are pretty clear, it can be hard to determine whether you qualify if you are self-employed. Below are some guidelines to help understand the qualifications as well as any limits on deducting child care for those who are.

Qualifications for Deduction

In order to make a child care tax deduction, you must have qualifying earned income. There are several steps to go through to determine if you qualify. You must meet all of the below requirements.

  • Have earned income during the year.
  • Child care paid to someone not claiming your child as dependent.
  • Child care paid to someone not related.
  • Be able to provide information for child care provider or make reasonable attempts to gather information. 

It is important to meet each requirement from the qualifying person test, earned income test, work-related expense test, joint return test and the provider identification test.

Limitations on Deduction

In order to claim a deduction for child care, you must have a qualifying income. If you lose money, then you will not have earned income to report and will not be able to deduct child care.

To follow the complete flow to determine whether or not you are eligible for child care tax deduction, visit the IRS website. This will ensure that you meet all requirements before gathering information and attempting to file.

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