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Old 01-03-2018, 11:42 AM
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Default How Much Do You Pay Into Taxes??

Last year I went to H&R Block and they told me to save 10%...now everything I'm reading is so much more. How much do you save each month??
She also told me you can do quarterly or lump sum at the end of the year and now I'm reading I'll get penalties for that. Bah ...so stressed!!
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Old 01-03-2018, 12:12 PM
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It is my understanding that when you are self employed you have to do your taxes quarterly. Intuit has a self employed program that I am currently learning how to use. It does seem to make things easier.
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Old 01-03-2018, 12:20 PM
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The intuit program estimates your quarterly taxes for you. You can take photos of receipt, link to a checking account and mark what purchases were business expenses, get paid by clients. It's pretty nice.
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Old 01-03-2018, 12:36 PM
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Quote:
Originally Posted by BrightBeginnings2014 View Post
Last year I went to H&R Block and they told me to save 10%...now everything I'm reading is so much more. How much do you save each month??
She also told me you can do quarterly or lump sum at the end of the year and now I'm reading I'll get penalties for that. Bah ...so stressed!!
The best advice is to consult with a tax person who specializes in daycare. Then, they will look at your individual needs beyond that.
In my experience, I have never seen a good daycare tax specialist at H&R Block.
There are so many write offs involved with in home daycare, it's best to really get to know what you can do or have someone (tax specialist) who does.

Beyond that:
If you are married/bringing in two incomes and that person brings in a W2 job, that significantly changes how much you should estimate.

If you have children under 18, that also really changes how much you should estimate.

Personally: (married, filing jointly) I have been doing this over 10 years. The first 8, I never paid estimated taxes and paid around $500 at the end of the year.
The last two years, our income changed a lot, so I estimated to pay $300-$400 quarterly and still pay $1000 at the end of the year.
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Old 01-03-2018, 01:02 PM
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I'm so nervous. My husband and I do this together so we don't have other money. Maybe I should go to someone else. She did tell me all these things to save but maybe there are more things i can write off. Last year we owed $5,000! However, part our fault. i went off our estimated from the previous year which we had made much more..anyway..just so nervous..need to figure out a better system.
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Old 01-03-2018, 01:20 PM
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Originally Posted by BrightBeginnings2014 View Post
I'm so nervous. My husband and I do this together so we don't have other money. Maybe I should go to someone else. She did tell me all these things to save but maybe there are more things i can write off. Last year we owed $5,000! However, part our fault. i went off our estimated from the previous year which we had made much more..anyway..just so nervous..need to figure out a better system.
What state are you in?

Personally, I would never use H&R Block as they are super expensive but I do hire someone else to do my taxes as it's confusing for sure!

I recommend starting with Tom Copeland's tax books if you need specific daycare information.
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Old 01-03-2018, 03:14 PM
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I agree about H&R Block. Long time ago we used them and they were less than adequate, IMO. And expensive. Plus a few years ago, they gave my brother some bad information. I'll never go to them again.
I have someone else do mine. I do have to pay quite a bit of estimated tax every quarter. It's about 1500. It $ucks but it is what it is. If I was working outside the home, I'd be paying taxes too.
Just to clarify, I'm single head of household and no dependents(that's when it really made a huge difference)
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Old 01-03-2018, 03:14 PM
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From what I understand, as long as your spouse has a w2 for his or her job and has a bit extra taken out every paycheck to accommodate some or all of your taxes that would be due, then you don't have to pay quarterly taxes as a self employed individual.
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Old 01-03-2018, 04:18 PM
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I went to H&R Block last year before taxes just to chat about what I needed to track as my great aunt used to own the one in town. When I mentioned it to my aunt that I had this meeting she told me to not use them. Hahaha.

I ended up going with someone else that had experience doing taxes for a few other daycares in town. He set it up so I pay in quarterly. I pay in almost $1500 quarterly. We estimated my income correctly but my deductions were way off so I’m interested to see how it all comes out when we meet again.

I’m also single head of household with no dependants for what it’s worth.
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Old 01-03-2018, 05:09 PM
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I have always used a tax professional who specialized in the business I was in. Tom has this post on finding a tax professional: http://tomcopelandblog.com/how-to-find-a-tax-preparer
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Old 01-03-2018, 05:23 PM
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Quote:
Originally Posted by BrightBeginnings2014 View Post
I'm so nervous. My husband and I do this together so we don't have other money. Maybe I should go to someone else. She did tell me all these things to save but maybe there are more things i can write off. Last year we owed $5,000! However, part our fault. i went off our estimated from the previous year which we had made much more..anyway..just so nervous..need to figure out a better system.
Since both of you rely on this income and don't have outside taxable income, that can be rough!
Save every-single-receipt. Read up on Tom Copeland's blog & Facebook page. You can learn a lot there.

Record every expense related to your house. Pretty much everything you pay into your home will have a Time/Space deduction.
Speaking T/S- make sure you factor in EVERY moment you are doing work related things. Including the time spent reading this post. Shopping, Continuing Ed courses, mailing your licensing info, responding to emails, returning books to the library after hours. ALL of it that relates to daycare in any way.

Get to know the little things that can benefit you... like instead of giving gifts to children for birthdays and Christmas to take home & open, they open their gifts at daycare to play (then bring home) and it is then an "activity" (100% deductible) instead of "gift" ($25/year limit).
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Old 01-03-2018, 08:34 PM
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Tom has a book on all of the thousands of things you can deduct. Did you know you can deduct your furniture. He has a household inventory book! I learned most of what I know by reading every single post going back several years in the daycare.com tax forum. My tax lady knew nothing about daycare, but I bought her Tom's workbook, sent her the link to his blog, and I paid for her to listen to his tax webinar. It was worth every penny!
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Old 01-04-2018, 12:55 PM
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Originally Posted by Sunchimes View Post
Tom has a book on all of the thousands of things you can deduct. Did you know you can deduct your furniture. He has a household inventory book! I learned most of what I know by reading every single post going back several years in the daycare.com tax forum. My tax lady knew nothing about daycare, but I bought her Tom's workbook, sent her the link to his blog, and I paid for her to listen to his tax webinar. It was worth every penny!
But is this the amount or the time spent?
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Old 01-04-2018, 01:27 PM
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Default Estimated taxes

Quote:
Originally Posted by BrightBeginnings2014 View Post
Last year I went to H&R Block and they told me to save 10%...now everything I'm reading is so much more. How much do you save each month??
She also told me you can do quarterly or lump sum at the end of the year and now I'm reading I'll get penalties for that. Bah ...so stressed!!
IRS rules say you must be paying in at least 90% of your taxes each quarter. This can be done by having your husband withhold enough through his job to cover your taxes, so then you wouldn't have to file estimated taxes quarterly. Or, you can file quarterly Form 1040ES. How much you will owe in estimated taxes varies greatly depending on your income, expenses, and personal tax situation (number of own children, medical expenses, other credits, etc.). As a general rule of thumb, you'll owe about 20% of your gross income in estimated taxes. Check with your state about paying in enough in state income taxes as well.
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Old 01-04-2018, 01:35 PM
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IRS rules say you must be paying in at least 90% of your taxes each quarter. This can be done by having your husband withhold enough through his job to cover your taxes, so then you wouldn't have to file estimated taxes quarterly. Or, you can file quarterly Form 1040ES. How much you will owe in estimated taxes varies greatly depending on your income, expenses, and personal tax situation (number of own children, medical expenses, other credits, etc.). As a general rule of thumb, you'll owe about 20% of your gross income in estimated taxes. Check with your state about paying in enough in state income taxes as well.
My husband goes to school full time so this is our only income.
20% of total income before deductions correct?
Is the penalty for not paying quarterly 3%? I read that somewhere, can't remember where though.
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Old 01-05-2018, 09:21 AM
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Default estimated taxes

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Originally Posted by BrightBeginnings2014 View Post
My husband goes to school full time so this is our only income.
20% of total income before deductions correct?
Is the penalty for not paying quarterly 3%? I read that somewhere, can't remember where though.
Yes, 20% of your income before deductions. This is a rough estimate to cover Social Security/Medicare and federal income taxes. The penalty is a little less than 3%: https://www.irs.gov/pub/irs-pdf/f2210.pdf
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Old 01-05-2018, 12:15 PM
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Oh no, how much would you suggest quarterly?
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Old 01-05-2018, 03:19 PM
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Default estimated taxes

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Originally Posted by BrightBeginnings2014 View Post
Oh no, how much would you suggest quarterly?
If you did child care in 2016, use your taxes from that year as a guide going forward. Once you do your 2017 taxes, use that as a guide going forward.
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