Hi there. Please no judgement here. I'm just trying to figure out how the heck I'm supposed to file my taxes this year. I watched 2 children ( my neighbours kids) from Feb this year until Dec of this year. During this time frame, I was given cash payment and have no documentation of ever even being paid. The only proof I have that I even watched children is being a certified provider and claiming meals through our food program here. My question is, how do I file, and what do I file? Please someone help me.

Reply

Wow. I am not passing judgement, I promise. But you have to run you childcare as a business. That means keeping records and receipts. Not just for what you are paid, but for what you spend even on things like your house payment, utilities, toys, etc because all of those things are actually deductions. Are the parents asking for tax info? That would change what I would do. But it is hard to give you correct advice when you don't have the documentation.

Reply

You also should keep accurate attendance records for hours children are there and time you spend on daycare things when children are not there. You will need those when figuring deductions! I highly suggest this book.

Reply

I know, it definitely should've been documented. But they were my neighbors and they just handed me cash. They paid the same rate weekly. Their last day was the 18th of this month and I won't be continuing care anymore. They haven't asked me for anything at all or mentioned claiming anything.

Reply

Well if they paid the same amount each week, you should be able to sit down with a calendar and figure it out. But it is up to them to bring you a W10 and ask for the info, you don't "have" to offer them anything otherwise. By not continuing care do you mean you will no longer do daycare at all or just that child?

Reply

Regardless of whether parents request payment info or not you are still required to claim your income.

OP I would do your best at estimating the amount the family paid (based on the info you do have) and move forward that way.

Reply

Yes, I understand that I must claim my income, hence the reason I'm trying to figure out how to go about it.
Do you know what forms we are required to file?
I won't be doing daycare at all. Well, if my other business venture can stay stable for me.

Reply

I have basically zero knowledge of "how" or "what" to file. I just bring my paperwork into my accountant and she handles it all.

I would either spend some time reading the tax information area of this forum (LOTS of good info here) and/or contact a tax professional and I am sure they can lead you in the right direction to file properly. It's probably something you will become pretty familiar with should you continue being self employed in any field.

I also want to say, good for you for trying to do the right thing in filing; despite the lack of tracking/recording the income.......that is the downside of self employment....record keeping. Yuck! LOL!

Reply

You must report your income on IRS Form Schedule C. This includes money you received from the Food Program. You can deduct food expenses using the standard meal allowance rule without any food receipts: $1.31 breakfast, $2.47 lunch/supper, and $.73 snacks.

You can also deduct many other expenses, including car trips ($.575 per mile). Use your calendar or receipts or cancelled checks or credit card statements as evidence of these business trips.

You can also deduct a portion of your house expenses (property tax, mortgage interest, utilities, house insurance, house repairs and house depreciation). To claim these expenses, fill out IRS Form 8829 Expenses for Business Use of Your Home.

It's quite possible that you will owe very little in taxes. For further information, call me at 651-280-5991. I don't charge anything for answering questions.

Reply

Lots of good suggestions above. I just wanted to say I feel for you. I started my home daycare sort of by accident - one friend's child at a time the first year slowly building up to my state's unlicesned max by the end of the year. I had NO records and had to sit down with my bank account online, a calendar and my best guess to figure out taxes. It was painful working it backwards Best of luck!

Reply