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  #1  
Old 02-02-2018, 08:50 PM
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Default Deductions Totaling $3,337.85

I just finished my record keeping for the short time I was in operation as a child care provider (opened doors Sept 28th) and my total deductions are upwards of $3,000! We finished out the basement and added a playroom and a nap room so the kids would have a place to play/sleep so those were the big expenses but I just feel like my deductions are a little too high for the short time I was in service.. I have a receipt to back up every purchase made but wondering if i'm missing something. Listed below is a breakdown of my calculations. If anyone sees any red flags with this, please advise!

UTILITIES DEDUCTION-$550.96(gas, electric, trash, etc.)
HOUSE DEDUCTION-$67.34 (home insurance)
MAINTENANCE DEDUCTION- $988.89 (playroom/nap room)
BUSINESS EXPENSE DEDUCTION-$1,445.39(supplies)
MILEAGE DEDUCTION -$285.26(based on .535 a mile)
MEAL DEDUCTION-$387.02(standard meal plan)
GRAND TOTAL DEDUCTIONS-$3,337.85
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Old 02-03-2018, 04:04 AM
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No red flags to me, especially if you're just starting out. There are always tons of start-up fees and costs making things child-care ready. But I'm sure Tom will know for sure.
Just wanted to add that for me, many of my first years doing child care, I ended up with 0 income due to deductions.
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Old 02-04-2018, 10:46 AM
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Default Deductions

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Originally Posted by katebethke View Post
I just finished my record keeping for the short time I was in operation as a child care provider (opened doors Sept 28th) and my total deductions are upwards of $3,000! We finished out the basement and added a playroom and a nap room so the kids would have a place to play/sleep so those were the big expenses but I just feel like my deductions are a little too high for the short time I was in service.. I have a receipt to back up every purchase made but wondering if i'm missing something. Listed below is a breakdown of my calculations. If anyone sees any red flags with this, please advise!

UTILITIES DEDUCTION-$550.96(gas, electric, trash, etc.)
HOUSE DEDUCTION-$67.34 (home insurance)
MAINTENANCE DEDUCTION- $988.89 (playroom/nap room)
BUSINESS EXPENSE DEDUCTION-$1,445.39(supplies)
MILEAGE DEDUCTION -$285.26(based on .535 a mile)
MEAL DEDUCTION-$387.02(standard meal plan)
GRAND TOTAL DEDUCTIONS-$3,337.85
All of these deductions meet the IRS definition of "ordinary and necessary" business expenses, so you are good. I assume that you are applying your time-space % to shared items such as utilities, insurance, maintenance, business expense above.
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Old 02-05-2018, 06:22 AM
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Utilities and House deductions were calculated using my t/s%, as for business expenses and maintenance- I claimed 100% because they were bought and used solely for child care. ( toilet paper, paper towels, sippy cups, cleaning supplies, etc.) The only item I applied a business% to was the playset because my son also uses. I calculated that percentage by business use hours/personal use hours.
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Old 02-05-2018, 10:36 AM
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My first few years in business I made almost no 'profit', due to deductions..

Same with start up costs for my husbands commercial construction business.

Looks about right (maybe even on the low end)
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Old 02-05-2018, 12:46 PM
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Default expenses

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Originally Posted by katebethke View Post
Utilities and House deductions were calculated using my t/s%, as for business expenses and maintenance- I claimed 100% because they were bought and used solely for child care. ( toilet paper, paper towels, sippy cups, cleaning supplies, etc.) The only item I applied a business% to was the playset because my son also uses. I calculated that percentage by business use hours/personal use hours.
In order to claim 100% of toilet paper and paper towels, you would have to be able to prove that your family never used the same bathroom, unless you changed the toilet paper rolls each time! So, if you have a bathroom exclusively used by your daycare kids, okay. Otherwise, use your time-space%. In any case, keep copies of receipts for all toilet paper, paper towels, etc. so you can show that you spent money on these items that were used personally.
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Old 02-12-2018, 12:26 PM
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Maybe I'm missing something...but I'm not seeing your home office deduction. That is usually a pretty big deduction. Also home depreciation.
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Old 02-12-2018, 02:11 PM
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I was told I could not claim any deductions unless I could deduct $24,000 or more and I just do not see myself ever spending $24,000 a year on my daycare. Maybe I was told wrong?
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Old 02-13-2018, 11:11 AM
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Default deductions

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I was told I could not claim any deductions unless I could deduct $24,000 or more and I just do not see myself ever spending $24,000 a year on my daycare. Maybe I was told wrong?
Wrong. What you are referring to is the question of whether to itemize on Schedule A or take the standard deduction of $24,000 for married couples. This has nothing to do with claiming deductions for your business. You can still deduct all your business expenses and take the $24,000 standard deduction.
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Old 02-13-2018, 11:16 AM
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Originally Posted by TomCopeland View Post
In order to claim 100% of toilet paper and paper towels, you would have to be able to prove that your family never used the same bathroom, unless you changed the toilet paper rolls each time! So, if you have a bathroom exclusively used by your daycare kids, okay. Otherwise, use your time-space%. In any case, keep copies of receipts for all toilet paper, paper towels, etc. so you can show that you spent money on these items that were used personally.
I actually do this- my daycare bathroom is exclusive use M-F but on Saturday and Sunday my kids/their friends use it. Every Friday I clean it top to bottom, put a new TP and paper towel roll in there and on Monday morning I switch them out.
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Old 02-13-2018, 11:21 AM
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Originally Posted by daycarediva View Post
I actually do this- my daycare bathroom is exclusive use M-F but on Saturday and Sunday my kids/their friends use it. Every Friday I clean it top to bottom, put a new TP and paper towel roll in there and on Monday morning I switch them out.
How would you prove this though if audited? I always wonder how the % use can be proved on these types of things.
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Old 02-13-2018, 04:56 PM
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How would you prove this though if audited? I always wonder how the % use can be proved on these types of things.
If you buy it on separate receipts they kinda have to take your word on it don't they? I mean ANYTHING I buy for daycare they could try to argue some friend's kid might visit and touch for a few minutes. There is no way to PROVE that they did or didn't.
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Old 02-14-2018, 12:50 PM
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Default receipts

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Originally Posted by hwichlaz View Post
If you buy it on separate receipts they kinda have to take your word on it don't they? I mean ANYTHING I buy for daycare they could try to argue some friend's kid might visit and touch for a few minutes. There is no way to PROVE that they did or didn't.
Keeping personal and business receipts for supplies, etc is the way to protect yourself in an audit.
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