What is the earned income test?

To be entitled to claim the child and dependent care credit, you must have earned some amount of income during the year. This earned income may include any wages, salaries, tips, etc., less any losses from self-employment. If you are married and filing jointly (and you must be filing jointly to claim this credit, if you’re married), both you and your spouse must have had earned income to claim the credit. The only exceptions to this requirement are where your spouse (or you) is a full-time student or disabled, physically or mentally, such that your spouse (or you) cannot care for himself/herself. However, these exceptions are only for one spouse - if you are both full-time students, you are not entitled to this credit.