What is the equation for finding this out?

Also I have another question, I live in a split level house and I have only been using my upstairs level floor for daycare and use all of the square footage on this level! However I have TONS of outside toys in our garage, basically takes up and entire garage stall, I have hooks in my entry way where all of the kids hang their coats and leave their shoes? I shuffle my toys in and out, rotate them ever so often and all of the toys that are NOT being used at a certain time pretty much fill my unfinished basement, we also walk through my unfinished basement to get to our backyard, but never play down there as it isn't finished! So my question is can I write off all of this square footage/ my entire house as being used for daycare, since no matter where you look in this house their is daycare things?!

Also we are in the middle of finishing our basement, my hubby is doing it in his spare time, so a little bit here and a little bit there! However, he told me that he is going to race the baby, in which is due in 63 days! I told him Good Luck! LOL So I was wondering if all of the stuff we are buying to finish the basement is something I can be writing off and how I do so?

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K so I found the time space percentage equation, but need help in understading it:
# hours home # square footage of home
used for buisness used regularly for buisness
_______________ X _______________________ =Time Space Percentage

Total # hours in Total # square feet in home
a year

Okay, so now is the # hours home used for buisness the total numbers at the end of the year, my total # of hours worked in daycare divided by 8766 hours which is the total # hours in a year?

Then I need to know about the second part of the equation once I figure out what square footage I can be using for daycare, like does it include, my unfinished basement, my entry way, my garage - basically my Total # of square feet of my home and then divide that by the total # square feet in home?


Time Percent equation on Buisness:

# hours home used for buisness
__________________________ = Time Percent
Total # hours in a year


So I take my total buisness hours at the end of the year and divide it by 8766 hours?

So when you want to figure out the extra hours you spend outside of buisness hours how do you do this, do you do it like this:

Time Percent equation outside of Buisness:

# hours spent outside of buisness, but on buisness
__________________________________________ = Time Percent
Total # hours in a year

and then do you add these two total percents to get your total Time Percent for the year?

Sorry for all of the questions I am just trying to get it all figured out and do it the right way, but get the most of out it!! Thanks Megan

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Yes but you add the total numbers you worked watching children PLUS the hours you spent doing business related things when the kids are not in your care. Example: Your hours are 6am-6pm but your first child arrives at 7:30am and leaves at 4:30 pm, your second child arrives at 9:00am and leaves at 5pm. Your had kids in your DC from 7:30am to 5pm so you worked 9 1/2 hours this day. But you started setting up the activities in the morning from 7am to 7:30am and after the last child left you cleaned up after them and spent an hour, this is time spent doing business related things and you would add this hour and a half to your hours worked making it 11 hours that you worked this day (make sure you keep logs of the time you worked when kids weren't in your care and sign-in sheets for your DC kids in case you get audited, you need to be able to prove that you did these things).

Yes, this give you your time %.

Just to make it clear, you can't claim time you spend out of your home doing business related things (shopping for groceries, training etc). For these you track the mileage but can't claim the time. You can only claim the time you spend working in your home doing business related things.

No not the percents, you add the hours. # of hours you took care of kids PLUS # of hours you spent doing business related things in your home when there were no DC kids THEN you divide that total by the total number of hours in a year (8,760) which gives you your time %.

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You can count any room you use on a "regular" basis as business use when calculating your space %. I would define regular use as 3-4 times a week. But this is a rough rule of thumb. Last year the IRS Child Care Audit Guide said that you must include the space of your basement and garage as part of the total square feet of your home. Most provider could say they use these spaces on a regular basis in their business because of storage, laundry room, furnace area, tools, bicycles, garbage can, etc.

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Boy, just reading all this makes me glad I have a CPA that does my taxes!!! I just enter stuff into excel, give her the sheet and let her do the work.

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one of the best parts of havin a small house is i can claim all parts of it

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The equation to finding your time/space% is like this:

Take your (A) number of business hours worked (the number of hours that you were in your home taking care of kids & the hours that you spent in your home doing business things before the kids arrived and after the kids went home) devided by (B) number of hours in a year (8,760) = (C) Your time %

(D) # of sq. ft. you use your home for business devided by (E)the total number of square feet in your home = (F) Your space %

Then multiply your (C) time % by (F) your space % = your time/space %


Any space that you use for any reason that has something to do with daycare can by used towards your space %. For example, if you use your kitchen to prepare meals, dining room to serve meals, living room as playspace, bathrooms are open for the DC kids, you have your computer in your bedroom and use it for record keeping for your business, store toys in the garage, wash DC blankets/toys in your laundry room and have a storage shed in your backyard that you also keep toys in, all of this counts and so needs to be measured. It doesn't matter whether or not your DC kids use it, it's whether or not you use the space for business.

Don't forget to keep track of the time that you spend in your home doing business related activities, this includes your family. Keep a log as to the hours that he works on the space (when there are no kids at your DC). These hours and any hours you spend setting up before your DC kids arrive and the hours you spend cleaning up after the DC kids leave. Add these hours to the number of hours that you cared for DC kids. It will give you a higher time%.

As long as you are already doing business or are ready to do business at least a portion of your cost for materials should be deductible. There's a lot of rules when it comes to home improvements so I would ask your tax preparer or get the Family Childcare Record-Keeping Guide by Tom Copeland. Just be sure to keep each and every receipt.

P.S. Keep in mind that if this space is going to be used only for DC and never for personal uses (it will be restricted from your family before or after daycare hours) then the entire space can be added as 100% business use which will make your space % even higher.

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