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Daycare and Taxes>Time/Space % Question
MsKara 11:39 AM 06-15-2010
Okay, so I just got minute menu and I love it. However, I'm trying to enter my expenses and I"m SOO confused. My daycare is in my basement and yet my kids play down there when the daycare is over. Does that mean everything I buy for the daycare as far as toys and stuff goes is not 100% daycare because my kids play down there in the evenings? Also, when I buy crafts I ONLY use them for daycare. However my daughter and son are home from school and participate in daycare crafts. Is that considered 100% business even though my children get to do the crafts too? Also, I bought a rug for down underneath the high chairs. Is this still time/percent or 100% business. It's so hard to know what is what. I'm assuming the children's bins and individual high chairs and stuff is 100% business. And then the hardest thing is stuff like ink for my printer and printer paper. I use TONS of ink and paper, and don't know if I should do time/percent or how I would calculate % of business use. These are tough ones.....
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Greenshadow 11:48 AM 06-15-2010
If you bought it for use for your daycare, its a daycare expense. You use it for daycare 100% of the time while you are open for business, right? It doesnt matter what you do after hours. Thats how I did mine. I claim my whole house because I use the rooms for napping. I sleep in my room after the daycare closes but I still claim the room 100% because I use it 100% of the time for daycare. Does that make sense?
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DCMom 12:09 PM 06-15-2010
You can claim 100% of the space in your house.

Technically, if you claim a room 100% it needs be exclusive use. My basement is exclusive use; there is a separate entrance and my family doesn't use it ever. If your children play there in the evenings and on weekends, it isn't considered exclusive use, but I think it would be worth the time to figure out the actual use %.

Any supplies that you use while your children are participating in daycare, should be counted as 100% daycare. If your child doesn't use the high chairs, I would count the rug as 100%. Printers, computers, televisions all that sort of thing is supposed to be figured as actual use, but who has time to keep track of every minute, for heavens sake?? And we know that the actual business use is always higher than out time/space, it seems. I would keep written track of the hours you use it for business and personal for a couple of weeks, then use that % and apply it to all supplies and depreciation.

Personally, I finally bought a separate computer and printer that I did all of my daycare record keeping, etc on and wrote everything associated with it at 100%. It was much easier
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kitkat 12:38 PM 06-15-2010
My understanding is that if your kids use it, then you can't count what they use as an expense. The same thing goes with what rooms are used in your house, unless the room/space is exclusively used for daycare. Figuring out your actual use might be better than using just your time space percentage.

Hopefully Tom Copeland will chime in and he can give a clear answer
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originalkat 03:05 PM 06-15-2010
If your kids use the room downstairs after business hours then it is not considered 100% business. Just include it in the square footage in your time/space calculation.

Any toys I buy go into the time/space percentage because my own kids are preschool age. However, if I only had teenagers for instance and they obviously do not play with the toys then I could claim 100%.

I dont know what the exact rules are on crafts done during daycare hours. I think it depends on if you take a liberal or conservative viewpoint. I Take the liberal side on this. Any crafts/curriculum done during daycare hours is 100% business because its intended and actual use is 100% business.

Things like highchairs (assuming your kids dont use them) or IMO the rug underneath would be 100%. But if the rug was in front of the entry door then I would use T/S% because although I would not have bought it except for my business, my family/guests still use it regularly to wipe their feet.

For printer paper and ink I use actual business % because MOST is used by me for my business. I just use an estimate of 75% because at LEAST 3 out of 4 things printed are for my business (probably more).

These are just my interpretations of what I have read from the Family Childcare Record Keeping Guide by Tom Copeland. Hopefully he will chime in on this since he is now a member of Daycare.com.
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Michael 03:11 PM 06-15-2010
We had another post on this topic: https://www.daycare.com/forum/showthread.php?t=11421
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Greenshadow 03:18 PM 06-15-2010
Originally Posted by kitkat:
My understanding is that if your kids use it, then you can't count what they use as an expense. The same thing goes with what rooms are used in your house, unless the room/space is exclusively used for daycare. Figuring out your actual use might be better than using just your time space percentage.

Hopefully Tom Copeland will chime in and he can give a clear answer
I do my taxes at H&R Block and I claimed 100% of my house because I used 100% of it at any given time for my daycare.
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originalkat 03:26 PM 06-15-2010
Originally Posted by Greenshadow:
I do my taxes at H&R Block and I claimed 100% of my house because I used 100% of it at any given time for my daycare.
Yes, if you use all of your house you can use 100% in the space part of the time/space calculation. I think the original poster was asking about exclusive use space which is different.
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Greenshadow 03:33 PM 06-15-2010
Originally Posted by originalkat:
Yes, if you use all of your house you can use 100% in the space part of the time/space calculation. I think the original poster was asking about exclusive use space which is different.
Ooooooo, okay. Sorry. I do remember doing exclusive use on my daycare room itself.
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MarinaVanessa 04:59 PM 06-15-2010
From what I understand supplies that your own children use cannot be counted as 100% daycare. It's like food. You can claim the amount that is used for daycare but if your own child eats at daycare then you have to figure that portion out of it and only the part that the DC kids eat is deductible.

I did a workshop about Daycare as a Business where they explained the taxes and record keeping portion of it and was explained that unless the space is only used for daycare 100% (meaning not family using it) then you can't consider it 100% for daycare. If your own kids use the room to play or use the toys to play with during non daycare hours then you have to do a time/% calculation and can't be considered 100% business. I found a tax consultant that specializes in home daycares and he said as much and does my taxes that way also.
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DCMom 07:50 AM 06-16-2010
Originally Posted by MarinaVanessa:
From what I understand supplies that your own children use cannot be counted as 100% daycare. It's like food. You can claim the amount that is used for daycare but if your own child eats at daycare then you have to figure that portion out of it and only the part that the DC kids eat is deductible
When my kids were younger and included in my daycare counts, I had 'daycare' crayons, glue, paper, tape, etc. Basic supplies. I didn't bother to break out what my kids used over the course of the day because the vast majority was used during daycare. That was the supplies I was referring to. I wasn't very clear in my response

Things like meals, preschool program, prepackage projects, admission fees, etc. I didn't deduct the cost for my child/ren just the daycare kids.

Everyone's situation is different; we all use our spaces etc in such different ways, it seems something is always open for interpretation. I always make it a practice to note why I am deducting the way that I am so if I am ever audited, I can plead my case! LOL~
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TomCopeland 10:46 AM 09-07-2010
The general rule is this: if you use a room exclusively for your business, you can calculate your Time-Space percentage using the exclusive use rule found on the Instructions to Form 8829 Expenses for Business Use of Your Home. Exclusive use means the room is never used for personal purposes, even just once a year. If your own child is in the room during child care hours, this is still business use. If you have an exclusive use room you can deduct the cost of everything in the room as 100% business (furniture, toys, supplies, etc.).

If you use a room on a regular basis for your business (not exclusive) then you can count the room as a regular use room as part of your Time-Space percentage. Regular use means about 3-4 times a week. You would list the square footage of this room on line 1 of Form 8829. Many providers use all the rooms in their home on a regular basis for their business. Thus a provider's space percentage would be 100%. Then a provider would multiply their space percentage by their time percentage (usually around 40%) to get their Time-Space percentage. Sometimes providers confuse their space percentage with their Time-Space percentage when referring to using their home 100% for business.

When provider have an exclusive use room they calculate their Time-Space percentage differently than what is shown on Form 8829.

Hope this helps. Tom Copeland
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legomom922 05:56 AM 09-08-2010
What happens in the event such as this:

I have a split level home. I use my family room downstairs as my daycare play room. Now at one end of the room, I have some wicker furniture(love seat, chair, coffee table), and at the other end, I have my office space, desk, and then everything in between is toys toys and more toys. Now, The only time the room is used, is when the dc kids are here, or I am doing bookkeeping. Now this room could be used for other things, such as me relaxing on my love seat, however, I NEVER DO THAT. It was there only to take up space, so even though *I could use this room & office* to do other things, I don't, so would I claim this room as 100% exclusive or not?

There are soooo many questions I think alot of us have on taxes, is there a really good resource that would explain all of this is in GREAT DETAIL? Or maybe we could have a thread that is constantly ongoing with tax questions? It's very confusing when you are new to claiming the income & writing off expenses.
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TomCopeland 06:52 PM 09-09-2010
The question to ask is: "Did you use the room exclusively for your business?" Exclusive use means never used personally. It doesn't matter if you could use it personally, but rather did you use it personally? If not, it's an exclusive use room.
My annual book Family Child Care Tax Workbook and Organizer explains how to fill out your tax return line by line. My Family Child Care Record Keeping has an extensive discussion of the Time-Space Percentage, claiming deductions, and keeping records.
Tom
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ninosqueridos 02:27 PM 09-10-2010
Originally Posted by TomCopeland:
My Family Child Care Record Keeping has an extensive discussion of the Time-Space Percentage, claiming deductions, and keeping records.
Tom
This book explains it so clearly and helped me a great deal when I started up my business last year!! Thank you Tom Copeland!!!!!!!!!!!!!
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