MJ wrote:

- quote -

You didn't say, but assuming (dangerous I know) that your
LLC is taxed at the default setting as a partnership, and
the partners therefore pay se tax on their earnings, then
yes, that qualifies for child care deductions.

However it must be noted that many CPA's take the position
that such net profits are not subject to SE tax, and perhaps
this is the tack he's taking.

ChEAr$,
Harlan Lunsford, EA n LA

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"Bill Brown" <brownwp[at]longwood.edu> wrote:
- quote -

Building on Bill Brown's point, what type of business does
the LLC conduct? If between you and your wife, you're 100%
owners and the LLC is profitable, unless the only income is
from rental real estate, interest, dividends, royalties or
other limited classes of income, you should have
self-employment income and pay self-employment taxes.
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"MJ" <manishjha01[at]gmail.com> wrote:

- quote -

Something is missing here. If you have an LLC you cannot
put yourself on a payroll system unless you have elected to
be treated as a corporation. In most cases, LLCs are
treated as partnerships and you cannot be an employee of a
partnership in which you hold more than a 2% interest.

When you file your personal return, your share of LLC
profits, from the K-1, carries to Schedule SE to compute
your self-employment social security tax. If which case,
you should be able to claim the credit for child care.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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MJ wrote:

- quote -

The child care credit requires earned income. If you didn't
pay SE tax on your LLC income (which was probably an error
on your part) then you're saying you don't have earned
income. Therefore, you don't get the child/dependent care
credit.

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Me and my wife are partners 50/50 in LLC based in NJ -
office at home.

I have a child going to day care.

I did not do any payroll for ourself. Kept all business
expense from one account and one credit card. Transferred
money to personal account for personal expenses.

My CPA tells me that I cannot claim child care because I did
not do payroll and pay payrolll taxes. Does this sound
accurate - just want to verify.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >