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    Subchapter S Earnings - active participant - Is this not considered earned Income for Child Care credit?

    beckyc50
    Level 1
    ‎12-07-2019 10:25 AM

    Why does Subchapter S earnings not contribute to earnings for child tax Credit?

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    abctax55
    Level 15
    ‎12-07-2019 10:25 AM

    "EARNED income" means subject to SE tax (in general).

    K-1 income flowing from an S-Corp isn't.... sorta the reason ( or one of them...) for forming an S-Corp.

    "*******Tax software is no substitute for a professional tax preparer*******
    ( Generic Comment )"

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    6 Comments 6
    abctax55
    Level 15
    ‎12-07-2019 10:25 AM

    "EARNED income" means subject to SE tax (in general).

    K-1 income flowing from an S-Corp isn't.... sorta the reason ( or one of them...) for forming an S-Corp.

    "*******Tax software is no substitute for a professional tax preparer*******
    ( Generic Comment )"
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    Just-Lisa-Now-
    Level 15
    Level 15
    ‎12-07-2019 10:25 AM

    They should have a W2 from the S-Corp if they are doing work for it...the W2 would have earned income.


    ♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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    abctax55
    Level 15
    ‎12-07-2019 10:25 AM
    "should"..... :smiling_imp::smiling_imp:
    "*******Tax software is no substitute for a professional tax preparer*******
    ( Generic Comment )"
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    garman22
    Level 13
    Level 13
    ‎12-07-2019 10:25 AM
    I sometimes question this myself......
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    qbteachmt
    Level 15
    ‎12-07-2019 10:25 AM
    "Active participant" = Employee = Wages = qualify for the Earned Income Credit, because W2 Wages = earned income. The amount on the K-1 is the amount passed through as taxable to the shareholder, not their Earned amount. Their Earned amount as part of payroll for the corporation was part of Expenses for the corporation.
    *******************************
    "Level Up" is a gaming function, not a real life function.
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    garman22
    Level 13
    Level 13
    ‎12-07-2019 10:25 AM
    That is a good definition. Thanks!!
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