Can Parents Claim the Child Care Tax Credit if I'm Not Licensed?

Yes, under two circumstances.

First, if you are caring for six children or fewer (not counting your own children) parents can claim the credit. In this situation it doesn't matter if you are in violation of your state's child care licensing rules.

Second, if you are caring for more than six children, parents can claim the credit as long as you are not in violation of your state's child care licensing rules.

See the Instructions to IRS Form 2441 Child and Dependent Care Expenses.

Comment: It doesn't make sense to me to allow parents to claim the child care tax credit when they use a caregiver caring for six children or fewer and who is violating their state's child care licensing rules. If the state doesn't think it's safe for children to be in such a setting, why give their parents a tax credit? But that's the law.