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Daycare and Taxes>Closing Daycare
Unregistered 04:51 AM 01-13-2016
So I closed my daycare mid January of 2015 (can't believe it's been a year!) before my baby was born. My last tuition payments were in Dec 2014 due to deposits for the last weeks of care. So I had no income in 2015 but obviously expenses. Do I have to file business this year since I have no income to subtract the expenses from?
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TomCopeland 09:27 AM 01-13-2016
Originally Posted by Unregistered:
So I closed my daycare mid January of 2015 (can't believe it's been a year!) before my baby was born. My last tuition payments were in Dec 2014 due to deposits for the last weeks of care. So I had no income in 2015 but obviously expenses. Do I have to file business this year since I have no income to subtract the expenses from?
You can claim business expenses you had up until mid-January when you closed. So, you can show a small loss in 2015.
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Unregistered 07:32 AM 01-15-2016
Thanks, Tom. I didn't think expenses affected taxes besides reducing the amount of income earned.
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Unregistered 10:19 PM 01-18-2016
How does that work, claiming expenses with no income? Is there really a benefit, and if so does it look "odd" to the IRS and increase the possibility of an audit?
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TomCopeland 12:12 PM 01-19-2016
Originally Posted by Unregistered:
How does that work, claiming expenses with no income? Is there really a benefit, and if so does it look "odd" to the IRS and increase the possibility of an audit?
If you truly were in business and trying to recruit families, but didn't earn any income for the year, you would show a loss on your tax return because you probably had some business expenses. Showing a small loss in one year will not attract the attention of the IRS. Showing losses 3 out of 5 years will.
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Unregistered 01:58 PM 01-19-2016
Originally Posted by TomCopeland:
If you truly were in business and trying to recruit families, but didn't earn any income for the year, you would show a loss on your tax return because you probably had some business expenses. Showing a small loss in one year will not attract the attention of the IRS. Showing losses 3 out of 5 years will.
I wasn't recruiting in 2015, I gave a months notice to close in December and worked until mid January. But no one paid the last two weeks as I had deposits already to cover those weeks, so I was open for about two weeks without income. It's easier to just not claim any business expenses, and just not file any business, but I wasnt sure what's legal and if there's a benefit to claiming those couple weeks of expenses against $0 income.
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TomCopeland 06:19 PM 01-19-2016
Originally Posted by Unregistered:
I wasn't recruiting in 2015, I gave a months notice to close in December and worked until mid January. But no one paid the last two weeks as I had deposits already to cover those weeks, so I was open for about two weeks without income. It's easier to just not claim any business expenses, and just not file any business, but I wasnt sure what's legal and if there's a benefit to claiming those couple weeks of expenses against $0 income.
If you are married, then claiming a loss with help reduce the taxable income of your husband. If you are single, and earned other income, it will help reduce that taxable income.
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