9508

The following diagnostic is generating:

You must manually reduce the amount of qualified childcare expenditures claimed as a deduction, used to figure any other credit, or capitalized as a depreciable asset to the extent of the credit allowed on Form 8882, line 2 or line 4.

Solution:

Use the credit amount allowed on Form 8882

Critically informational, won't prevent e-file transmission.
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RLCTriad
‎09-12-2022 02:37 PM
‎09-12-2022 02:37 PM

A single-owner employee of S-Corp wants to deduct in-home childcare expenses as a business expense on the K-1. There are no other employees and only the owner/employees child participates. There is not a dedicated portion of the home for daycare as only a nanny will be employed as household employee throughout the home. There are no other company employees and no other children are provided for. These childcare expenses would not be ordinary to the line of business but would be necessary for the employee to work full time in the business.

Can the owner deduct the in-home childcare expense as a business expense on the K-1?

sjrcpa
‎09-12-2022 07:59 PM
‎09-12-2022 07:59 PM

No. Dependent care benefits are a thing, but not tax free to a more than 2% S Corporation shareholder.