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Daycare and Taxes>New and Overwhelmed
AAK 10:58 AM 03-19-2015
I am trying to figure out what to supply to a CPA (which I am still looking for) and I am overwhelmed. First I started watching 1 child in July (legal without a license in CA) which is also about the time I started getting ready for my licensing. I however did not get licensed until the end of November. First, does anyone know if I can write off things like time use % of house and utilities, meals, miles and field trip expenses, prior to being licensed. Also I was going through Tom Copelands book for 2014 taxes and it looks like anything over $200 has to be depreciated. Do I have to clump everything together? For instance I bought 2 cubbies that were $99 each, a used table for $150, a used couch for $150, can I itemize or do I have to clump furniture. I also bought a lot of toys, do I clump as toys? For the toys it would be over $200 but probably only about $400 or $500, obviously since I had so much coming out this year between safety equipment, classes, background check, toys, furniture, etc....I was hoping to be able to write it all off and didn't realize I would have to depreciate over 15 years. I however also did not know I could depreciate things in the house we already owned. That in itself is overwhelming. I want to get my biggest tax benefit but am not quite sure how I am going to include everything in the inventory and what to put down for what it's worth. For instance I am an avid cook and have a ton of small appliances, baking and cooking supplies. How do you inventory all of that? Do you just say Tupperware and list it all together and try to figure out an amount? I think it would be a huge list and with the fair market value it might not be much of a write off over 15 years, wondering if it's worth doing. Thoughts?
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Blackcat31 03:04 PM 03-19-2015
Originally Posted by AAK:
I am trying to figure out what to supply to a CPA (which I am still looking for) and I am overwhelmed. First I started watching 1 child in July (legal without a license in CA) which is also about the time I started getting ready for my licensing. I however did not get licensed until the end of November.

First, does anyone know if I can write off things like time use % of house and utilities, meals, miles and field trip expenses, prior to being licensed. Also I was going through Tom Copelands book for 2014 taxes and it looks like anything over $200 has to be depreciated. Do I have to clump everything together? For instance I bought 2 cubbies that were $99 each, a used table for $150, a used couch for $150, can I itemize or do I have to clump furniture. I also bought a lot of toys, do I clump as toys?

For the toys it would be over $200 but probably only about $400 or $500, obviously since I had so much coming out this year between safety equipment, classes, background check, toys, furniture, etc....I was hoping to be able to write it all off and didn't realize I would have to depreciate over 15 years. I however also did not know I could depreciate things in the house we already owned.

That in itself is overwhelming. I want to get my biggest tax benefit but am not quite sure how I am going to include everything in the inventory and what to put down for what it's worth. For instance I am an avid cook and have a ton of small appliances, baking and cooking supplies. How do you inventory all of that? Do you just say Tupperware and list it all together and try to figure out an amount? I think it would be a huge list and with the fair market value it might not be much of a write off over 15 years, wondering if it's worth doing. Thoughts?
Welcome to the forum!

I don't have answers to some of your questions (I am not in CA and I am NOT skilled in anything to do with taxes...) but I DO know you can write off all your business expenses even if you are not licensed.

Hoping someone else that knows taxes will have answers for you.

We do have a resident tax guru (Tom Copeland) that comes to the board and answers questions about this so be patient and I am sure he will have the answers you are looking for.
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TomCopeland 03:49 PM 03-19-2015
Originally Posted by AAK:
I am trying to figure out what to supply to a CPA (which I am still looking for) and I am overwhelmed. First I started watching 1 child in July (legal without a license in CA) which is also about the time I started getting ready for my licensing. I however did not get licensed until the end of November. First, does anyone know if I can write off things like time use % of house and utilities, meals, miles and field trip expenses, prior to being licensed. Also I was going through Tom Copelands book for 2014 taxes and it looks like anything over $200 has to be depreciated. Do I have to clump everything together? For instance I bought 2 cubbies that were $99 each, a used table for $150, a used couch for $150, can I itemize or do I have to clump furniture. I also bought a lot of toys, do I clump as toys? For the toys it would be over $200 but probably only about $400 or $500, obviously since I had so much coming out this year between safety equipment, classes, background check, toys, furniture, etc....I was hoping to be able to write it all off and didn't realize I would have to depreciate over 15 years. I however also did not know I could depreciate things in the house we already owned. That in itself is overwhelming. I want to get my biggest tax benefit but am not quite sure how I am going to include everything in the inventory and what to put down for what it's worth. For instance I am an avid cook and have a ton of small appliances, baking and cooking supplies. How do you inventory all of that? Do you just say Tupperware and list it all together and try to figure out an amount? I think it would be a huge list and with the fair market value it might not be much of a write off over 15 years, wondering if it's worth doing. Thoughts?
Since you were operating legally before your got your license you can deduct all house related expenses from the month you first started caring for children.

The depreciation rules changed recently. You can deduct in one year any item that costs less than $500. Household items that cost more than $500 are depreciated over 7 years, not 15 years.

All items you owned before your business began (and were not purchased with the business in mind) must be depreciated, regardless of their cost. Use the estimated value of these items at the time your business began and depreciate them as one item over 7 years. It is worth doing a comprehensive inventory of all such items. You can lump things together (6 chairs, 12 sets of dinnerware, 45 DVDs, etc.).
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