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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 01-01-2013, 10:30 PM
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Default 63% T/S Ratio?! Tom? Anybody? Eek!

Browsing around the forum I'm seeing this is a high ratio. I'm not sure what I could be doing wrong, if anything. I've only been open since November first and I don't know if that makes a difference. I'm open Mon-Fri from 5am-6pm. These are my stats.

Time:
Nov- 286 Hours
Dec- 273 Hours

Child Hours: 559

And this is not factoring my time spent before and after children are here.

Space:
Total Square Feet- 1034
Square Feet of rooms used 100% for business- 110
Square Feet of rooms used regularly for business- 675

I live in a small home, but there are 4 bedrooms. One of those is the child care playroom. I use every room in the house for child care related things except my son's room, the master bedroom and the master half bath. Am I missing anything here?

Once I input my before and after care hours won't that bring my percentage up even more? I'm using MMK and TurboTax. Thank in advance!
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Old 01-02-2013, 05:45 AM
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Child care hours 559/8760 hours in the year .0638 or 6.38%

For ease: 675/1034 = .65 or 65%
Then you multiply those two answers or .0638 x .65 = .041 or 4%

This page explains how to do the calculations for 100% rooms as well, as that will raise your percentage, but not to the level you have listed there. Good luck
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Old 01-02-2013, 07:29 AM
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Thank you so much for this tip how to calculate time and space , etc.. And the helpful link.
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Old 01-02-2013, 08:13 AM
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Quote:
Originally Posted by Angelsj View Post
Child care hours 559/8760 hours in the year .0638 or 6.38%

For ease: 675/1034 = .65 or 65%
Then you multiply those two answers or .0638 x .65 = .041 or 4%

This page explains how to do the calculations for 100% rooms as well, as that will raise your percentage, but not to the level you have listed there. Good luck

Thank you! But I have only been open since November 1st. So wouldn't it be 559/1464(the number of hours in November and December)=.3818 or 38.18% ? These are the figures MMK gave me because it also asks if my business was only open a portion of the year and has me enter those dates.

4% would be terribly LOW because I use MOST of my home and am open 13 hours a day and spend an additional 2 hours or so on work related tasks each day.

Thanks again. Just trying to wrap my head around all of this.
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Old 01-02-2013, 08:18 AM
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Actually the 63% is way too high. Especially since you only use such little space EXCLUSIVELY for daycare. I have a whole half of my house just exclusive for daycare (which means those rooms are not used for ANYTHING else) and my t/s is 53%. Since most of your rooms are shared space, and you have only been open a couple months, it would be low. Average is about 30-35%.
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Old 01-02-2013, 09:05 AM
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Quote:
Originally Posted by Southern Mama View Post
Thank you! But I have only been open since November 1st. So wouldn't it be 559/1464(the number of hours in November and December)=.3818 or 38.18% ? These are the figures MMK gave me because it also asks if my business was only open a portion of the year and has me enter those dates.

4% would be terribly LOW because I use MOST of my home and am open 13 hours a day and spend an additional 2 hours or so on work related tasks each day.

Thanks again. Just trying to wrap my head around all of this.
I would check in with Tom just to be sure, but I am pretty sure you only get the percentage based on the entire year. It stinks, but you only used your house for two months, so you only get to claim the time for that.

You would definitely want to include the hours you are working doing other things for the daycare, so that percentage will go up some, and you do get to claim the 100% room for all 24 hours of the days you are open, but still need to limit it to the part of the year you were open.

Basically, think about it like this:
You are claiming the space for the actual time it is being used as a portion (percentage) of the year. So you can't claim any part of the year (8760 hours) that you weren't/aren't open except for your 100% daycare room.

Next year your percentage will be quite a bit higher, if that helps.
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Old 01-02-2013, 01:14 PM
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Default Time-Space %

Quote:
Originally Posted by Southern Mama View Post
Browsing around the forum I'm seeing this is a high ratio. I'm not sure what I could be doing wrong, if anything. I've only been open since November first and I don't know if that makes a difference. I'm open Mon-Fri from 5am-6pm. These are my stats.

Time:
Nov- 286 Hours
Dec- 273 Hours

Child Hours: 559

And this is not factoring my time spent before and after children are here.

Space:
Total Square Feet- 1034
Square Feet of rooms used 100% for business- 110
Square Feet of rooms used regularly for business- 675

I live in a small home, but there are 4 bedrooms. One of those is the child care playroom. I use every room in the house for child care related things except my son's room, the master bedroom and the master half bath. Am I missing anything here?

Once I input my before and after care hours won't that bring my percentage up even more? I'm using MMK and TurboTax. Thank in advance!
Here's how you calculate your Time-Space %:
110 exclusive use square feet divided by 1034 total square feet = 10.6%
675 regular square feet divided by 1034 total square feet = 65.2%

559 hours used home for business divided by number of hours in November and December (1,464 - 30 days in November + 31 days in December x 24 hours a day = 1,464) = 38.1%

65.2% x 38.1% = 24.8%
10.6% + 24.8% = 35.4%

You need to include in the number of hours you worked the number of hours you spent on business activities in your home when children were not present. This will increase your percentage.
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Old 01-02-2013, 02:51 PM
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Quote:
Originally Posted by TomCopeland View Post
Here's how you calculate your Time-Space %:
110 exclusive use square feet divided by 1034 total square feet = 10.6%
675 regular square feet divided by 1034 total square feet = 65.2%

559 hours used home for business divided by number of hours in November and December (1,464 - 30 days in November + 31 days in December x 24 hours a day = 1,464) = 38.1%

65.2% x 38.1% = 24.8%
10.6% + 24.8% = 35.4%

You need to include in the number of hours you worked the number of hours you spent on business activities in your home when children were not present. This will increase your percentage.

Ah! So I do only count Nov-Dec. Perfect! Thank you so much! I had input a number incorrectly and when I refigured it today my number was much closer to yours. Thank you so much for your help!
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Old 01-02-2013, 04:58 PM
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Quote:
Originally Posted by TomCopeland View Post
Here's how you calculate your Time-Space %:
110 exclusive use square feet divided by 1034 total square feet = 10.6%
675 regular square feet divided by 1034 total square feet = 65.2%

559 hours used home for business divided by number of hours in November and December (1,464 - 30 days in November + 31 days in December x 24 hours a day = 1,464) = 38.1%

65.2% x 38.1% = 24.8%
10.6% + 24.8% = 35.4%

You need to include in the number of hours you worked the number of hours you spent on business activities in your home when children were not present. This will increase your percentage.
Tax Act automatically puts 8760 into that place in the form. Any idea how one overrides this? It doesn't matter this year, but it would have been very handy the year I moved and was only open Sept -Dec. I may have to go back and recheck that, and see if it is over-ridable.
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  #10  
Old 01-03-2013, 09:32 AM
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Default Time-Space %

Quote:
Originally Posted by Angelsj View Post
Tax Act automatically puts 8760 into that place in the form. Any idea how one overrides this? It doesn't matter this year, but it would have been very handy the year I moved and was only open Sept -Dec. I may have to go back and recheck that, and see if it is over-ridable.
I don't know if you can override this with Tax Act.
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