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Daycare and Taxes>Unlicensed, Taxes, Depreciation
hgufrin 04:37 PM 02-01-2012
Hi,

My wife is an unlicensed daycare provider for 3. Because she is unlicensed we can not claim expenses such as food, house depreciation, etc.

But - the parents claim the daycare fees they pay to my wife. Is that okay?
Last - When we sell our house 5 years down the road... The IRS will not try to charge us taxes on the depreciation that we never took in the first place correct?

I know they will charge us if we are licensed...

P.S. - We do claim all the income she makes.... So the Gov't knows we have a daycare. I sure would appreciate any help here.
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Blackcat31 01:27 PM 02-21-2019
Originally Posted by hgufrin:
Hi,

My wife is an unlicensed daycare provider for 3. Because she is unlicensed we can not claim expenses such as food, house depreciation, etc.

But - the parents claim the daycare fees they pay to my wife. Is that okay?
Last - When we sell our house 5 years down the road... The IRS will not try to charge us taxes on the depreciation that we never took in the first place correct?

I know they will charge us if we are licensed...

P.S. - We do claim all the income she makes.... So the Gov't knows we have a daycare. I sure would appreciate any help here.
If she is license exempt you can absolutely still claim expenses.
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TomCopeland 02:10 PM 02-22-2019
Originally Posted by hgufrin:
Hi,

My wife is an unlicensed daycare provider for 3. Because she is unlicensed we can not claim expenses such as food, house depreciation, etc.

But - the parents claim the daycare fees they pay to my wife. Is that okay?
Last - When we sell our house 5 years down the road... The IRS will not try to charge us taxes on the depreciation that we never took in the first place correct?

I know they will charge us if we are licensed...

P.S. - We do claim all the income she makes.... So the Gov't knows we have a daycare. I sure would appreciate any help here.
If you are exempt from licensing rules you can claim all deductions as if you were licensed. If you are in violation of licensing rules you can't claim house expenses on Form 8829, but you can claim all other business expenses on Schedule C, including food, toys, supplies, equipment, etc. If you are caring for fewer than 6 children and are in violation of state licensing rules, the parents can claim the child care tax credit, but not if you can for more than 6 children. If you are exempt from licensing rules the parents can claim the credit regardless of how many children you have.
If you are exempt from licensing rules you are still entitled to depreciate your home and you will owe taxes on this depreciation when you sell your home, regardless if you didn't claim the depreciation. If you are in violation of licensing rules you can't claim house depreciation and so you won't owe taxes on it later.
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hgufrin 02:15 PM 02-22-2019
Thank you!
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Tags:form 8829, taxes - unlicensed
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