Taxpayer asks:
I started a new business working from home in November 2009 and so far dont have income just losses. I also have my child in daycare and wanted to file his daycare tuition but with no income to report turbo tax isnt letting me use this. How do I go about using the daycare on my taxes? Thanks!
Taxgirl says:
Okay, don’t hate me for the answer on this one. You can’t claim your daycare expenses for 2009. You’re stuck.
This is the result of one of those really annoying rules that I’ve complained about before. The child care credit is dependent upon your qualify income. Qualifying income must be from wages or salaries or net earnings from self-employment. So that means if you report a loss on your business, you can’t claim anything. And if you only make a little bit of money, you can only claim a percentage based on that income. But if you’re a regular W-2 employer, your net doesn’t matter – you get to claim the credit based on your actual wages, not taking into consideration any deductible expenses.
While I get the technical reasons behind the rule (that you should offset expenses with income), I hate the policy behind it. It’s wrong-headed. But it is what it is.
Don’t shoot the messenger.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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