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Daycare and Taxes All things related to Taxes and running a Daycare post here. Topics of tax exemptions, forms, filings, tax write offs, IRS etc.

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  #1  
Old 11-12-2011, 06:31 PM
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Question First Time Tax Filer as Self-Employed- So lost!

After reading through a majority of these treads about taxes.......I think I've made a big mistake.

I started babysitting 4 children starting in January. In May, I received a lot more interest in my "babysitting" and I'm now a Group Home Daycare with 12 children enrolled.

I applied and received an EIN during the summer, I've copied and documented all income, expenses and miles, I use MMK and will provide my families with the proper documentations.......and I am confident I've covered all bases regarding my home daycare.

My big mistake......taxes. I saw someone mention paying quarterly taxes and this was the first time I've heard of this. I read through Tom Compland's blog and the more I read about quarterly taxes, the more I think I was suppose to be paying quarterly. I haven't been paying any taxes at all.......I assumed I would just do it all at the end of the year like I used to do when I was employed at a daycare center. But now that I'm self-employed - I realize I'm in charge of paying taxes for myself and I've saved a nice amount of money for this purpose.

My question(s):

1) Am I suppose to be paying taxes quarterly or will I be okay with paying taxes anually? Year-to-date, I've made around $15,000.

2) Will I be penalized and owe if I was indeed supposed to be paying quarterly?

3) What are the first steps I should be doing if I am required to pay quarterly? Are there special forms I need to complete and where/who do I send in my taxes to?

I'm so lost.....any help is super, super appreciated!!
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Old 11-12-2011, 11:45 PM
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We will be having a Tax time webinar with Tom Copeland soon. Last year we had over 60 members participate.
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Old 11-13-2011, 07:05 AM
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I think that if you have employees that is when you have do the quarterly taxes. My dad, my husband, and my self are all self employed and we all only pay when we do our income tax. When my dad had employees he had to do the quarterly taxes.
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Old 11-13-2011, 08:51 AM
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You have to pay quarterly, employees or not. I've been self employed for over 30 years (not in child care), and I only had an employee the last 4 years, when my husband retired and went to work for me. I've always had to pay quarterly if I was showing a profit.

There may be some loophole if this is your first year or something, I don't know, but seek a tax professional. You might want to consult one now. The next payment is due January 15, so you can still send in some that would lower penalties if you have any.
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Old 11-13-2011, 10:26 AM
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Yes, you should have been paying quarterly taxes being self-employed. Whether you have employees or not doesn't matter.

I'm not sure what happens when you should have been paying quarterly and you haven't been, there may be some penalties involved. I would consult a tax preparer or the IRS yourself and ask what you should do now.

If you are married and your spouse has had enough withholdings to cover what you would owe, then you do not have to pay quarterly taxes. This is what I do. My husband has a little extra withheld from his salary, so that at the end of the year that 'refund' money that we would be getting, is much much smaller because I need to 'pay' taxes on my income. Hopefully that makes sense...
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Old 11-14-2011, 08:09 AM
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I'd go to an accountant. I looked it up and and it said every self employed person needs to file a tax return and make estimated payments. My husband in some years has worked a normal job too and he had extra taken out, but according to what I read that in some cases EVEN if you are getting a return that you may be penalized for underpayment, not making payments in a timely matter, ect. We could have been penilized for that. We have never made estimated payments and have never been penalized, and I don't know why. I don't make much and with the way my husbands work is he doesn't make a profit until the last quarter and we are doing are tax return as soon as we can, but this is what the IRS says about the last payment due on Jan 17th You do not have to make this payment if you file your 2011 tax return by January 31, 2012, and pay the entire balance due with your return.
. But I know that we haven't paid our taxes that early. I don't know why we have never been penalized. Time for me to go to an accountant. Here is the Website for the Estimated Tax for Individuals http://www.irs.gov/pub/irs-pdf/f1040es.pd
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Old 11-14-2011, 01:04 PM
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Default Estimated Taxes

You may or may not need to pay estimated taxes quarterly, depending on your family situation. If you are single and your day care business is your only income, then you must file quarterly using IRS Form 1040ES Estimated Taxes. The form is basically a deposit slip where you enter how much you are paying. The deadline for the 4th quarter of 2011 is January 15, 2012. If you are married it may be that your husband had enough withheld from his paycheck to cover your taxes. If not, you can have him withhold more, or you can file quarterly.

You face possible penalties if you did not have at least 90% of the tax you owed paid each quarter. What you should do now is file the 3rd quarter Form 1040ES and pay in an estimate of the taxes you owed for January - August 31. A rough estimate of the federal income taxes and Social Security taxes you will owe is about 20% of your gross income. Then file the 4th quarter form. Don't worry about the IRS catching you. Sometimes they do, sometimes they don't - it's out of your control. There is no grace period for your first year in business.

You should also check with your state department of revenue to see if you need to file quarterly state estimated taxes.
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Old 11-14-2011, 01:08 PM
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I have never in 17 years paid quarterly taxes and I'm not even sure what they are. I have always had my taxes done by an accoutant/tax preparer and nothing has ever been said about doing quarterly taxes. I just give them all my figures and they go from there. I don't have employees, never had. So I would first talk to a tax preparer and go from there. In fact my first year ever that I did childcare I didn't save any receipts! Whoops, good thing I had only done it for 6 months that year.
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Old 11-16-2011, 09:14 AM
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I bought Tom's Recording Keeping Guide Book. It does talk about filing quarterly taxes and also has SO much wonderful information! Buy this book. I read the entire thing again last night and make notations to changes I need to make for my filing system. I have been LOST the entire year so far with my files as far as having one place to put it all together so it makes sense to someone else, like the IRS. Although I've kept all receipts since March the first three months I have minimal other then the basics, food/utilities/checks/etc, plus I switched banks in March so I don't have a lot of expenses the first part of the year for that account. Although I have all my payment information. Out of anything I knew that was important.

Anyway, there are some exceptions to the quarterly/yearly taxes rule. Look on the IRS website but it's also in Tom's book. I had no idea about quarterly taxes until I read the book and saw some info on here about it. This is my first year in business and I do have an exception so I will be fine (SHOULD!) filing at the end of the year since I held another job and withheld taxes from that job for 4 months and I will also unfortunately have a loss for this year for my business, as far as I can see. So far my taxes won't be horrible unless there are penalties and I need to finish my inputting before I know what % tax bracket I fall under. We'll see how that goes. This was a real learning year for me! Next year it will be SO much better. Which I am so grateful for because in 21 days or less (I have a feeling it will be less, )I'm having my daughter (plus my 4yr old son) and know I won't have hours to spend every day working on paperwork and tax information on top of regular working!
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Old 11-16-2011, 06:01 PM
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Quote:
Originally Posted by Michael View Post
We will be having a Tax time webinar with Tom Copeland soon. Last year we had over 60 members participate.

Im going to want to know when!
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Old 03-20-2013, 06:22 AM
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I just had my first daycare child enroll 2 months ago-He only comes 3 hours/day and I only get paid $105/week from his parents. He is an infant so there is no CACFP program for him as I only give him one bottle/day (not worth the paperwork involved). My husband works and has extra taken out for taxes but we depend on that as a refund come tax time, I don't want to lessen that for him by not paying taxes myself. Now, as it's almost April, I'm wondering how to go about paying self-employment taxes. Does anyone have any suggestions? Help!
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Old 03-20-2013, 08:20 AM
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Default Self-employment taxes

Quote:
Originally Posted by tamarab71 View Post
I just had my first daycare child enroll 2 months ago-He only comes 3 hours/day and I only get paid $105/week from his parents. He is an infant so there is no CACFP program for him as I only give him one bottle/day (not worth the paperwork involved). My husband works and has extra taken out for taxes but we depend on that as a refund come tax time, I don't want to lessen that for him by not paying taxes myself. Now, as it's almost April, I'm wondering how to go about paying self-employment taxes. Does anyone have any suggestions? Help!
It's too late in this quarter to have your husband withhold more from his taxes. So, you can file quarterly estimated taxes for your income by April 15th. File IRS Form 1040ES. It's basically a deposit slip indicating how much you are sending the IRS. You will owe about 20% of your gross income (parent fees and CACFP income).
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Old 03-20-2013, 08:21 AM
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Originally Posted by dave4him View Post
Im going to want to know when!
We had our tax webinar on February 12th. Watch for it next year.
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