Child Care Expense Credit

Hello -

I'm trying to clarify whether or not I am eligible to deduct any child care expense this year.

My wife is a stay-at-home mom with our 4 yr old son. Our son will be going to pre-school this fall. From what I can tell, pre-school expenses are deductible as child care.

But, here's the part I'm confused about. To take the deduction, does my wife also need to have earned income ? My wife will be caring for our infant nephew this fall. The infant's parents will be paying her for this care. The parents plan to deduct this expense and we plan to include this money in our income for the year. If my wife is required to have earned income to be able to deduct the child care expense, is this a valid form of income ?

I would appreciate any help. Thank You !

- Phil

Kimandfil,

Yes, your wife does need to have earned income before you qualify for the dependent care credit.

Self employment NET Income will qualify.

See IRS Pub 503, Child and Dependent Care Expenses.

You may also want to look at Pub 583, Starting A Business.

clydewolf -

Thanks for your comments. I'll check out the publications you mentioned. I appreciate your help !

Thanks !

- Phil