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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 12-16-2010, 06:44 PM
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Default First Year Filing Daycare Taxes *Confused*

My husband and I do our taxes ourselves through turbo tax, but I opened an in home daycare this year and I was wondering if I should go to H&R Block or something similar...even though it will cost HUNDREDS of dollars!

I keep meticulous records, I'm kind of OCD about it, I have time sheet records for all hours I worked, a calendar showing what days which kids were here, what meals/snacks they ate, dates I was paid and amount etc

I have all my receipts organized by month plus the dates I made the purchases and the amount of the purchase written on the calendar

I have meal tracking sheets for each week filled out and know to the penny how much I can claim for food reimbursment, same with mileage, etc

I have the square footage of each room I used documented, with the total percentage of house that I use, and the total number of hours my daycare is open

So, I have all my bases covered...so my question now is....now what?? What do I do with all these receipts that are stapled to my calendar, my utility bills, my mileage sheets, etc....do I just type my into into turbo tax and save all this paperwork in case I get audited, do I mail it to the IRS and let them leaf through it...There were some months where my spending outweighed my income after mileage, food, buying big ticket items to get started (playpens, bouncers, changing table, etc) and I'm scared that's going to sound off the warning bells if I don't mail in my receipts to "prove" my losses are legit.

I'm kind of a mess over this stuff right now, so any advice would be really, really appreciated!
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  #2  
Old 12-16-2010, 07:57 PM
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Here are a couple links and threads.

Tom Copeland: http://www.tomcopelandblog.com/

MMK http://www.daycare.com/forum/tags.php?tag=mmk

Turbo Tax http://www.daycare.com/forum/tags.php?tag=turbo+tax
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  #3  
Old 12-30-2010, 10:03 AM
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Default Now what?

Sounds like you've done a great job in keeping your business records. You have several options now:

1) Hire a tax professional - Although this costs money, it may be a good idea to do in your first year so you can see how things are done properly. For a tax professional directory of people who have experience with family child care: http://www.nafcc.org/business/record_keeping.asp

I caution against using someone who is not familiar with family child care.

2) Use Turbo Tax or Tax Cut software to do your own taxes. This is advisable only if you already know how to fill out your tax return. The software will not help you if you don't know what you are doing. For example, the software will ask you to enter your Supply expenses. It won't tell you what are supply expenses and it won't tell you to enter on the time-space percentage of shared supplies. It won't tell you anything about the time-space percentage.

3) Use my 2010 Family Child Care Tax Workbook and Organizer. This book takes you through each tax form, line by line. Tens of thousands of providers have used this book over the years to do their own taxes. It's published by Redleaf Press (www.redleafpress.org)
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  #4  
Old 12-30-2010, 02:00 PM
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Quote:
Originally Posted by TomCopeland View Post
Sounds like you've done a great job in keeping your business records. You have several options now:

1) Hire a tax professional - Although this costs money, it may be a good idea to do in your first year so you can see how things are done properly. For a tax professional directory of people who have experience with family child care: http://www.nafcc.org/business/record_keeping.asp

I caution against using someone who is not familiar with family child care.

2) Use Turbo Tax or Tax Cut software to do your own taxes. This is advisable only if you already know how to fill out your tax return. The software will not help you if you don't know what you are doing. For example, the software will ask you to enter your Supply expenses. It won't tell you what are supply expenses and it won't tell you to enter on the time-space percentage of shared supplies. It won't tell you anything about the time-space percentage.

3) Use my 2010 Family Child Care Tax Workbook and Organizer. This book takes you through each tax form, line by line. Tens of thousands of providers have used this book over the years to do their own taxes. It's published by Redleaf Press (www.redleafpress.org)
number 2 confused me a bit...if I were to use turbo tax, would i enter my exact expenses in one place (diapers, wipes, etc) and the time-space stuff (percentage of household bills, etc) somewhere else, or would i add it all together?
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Old 12-30-2010, 03:13 PM
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Quote:
Originally Posted by TomCopeland View Post
3) Use my 2010 Family Child Care Tax Workbook and Organizer. This book takes you through each tax form, line by line. Tens of thousands of providers have used this book over the years to do their own taxes. It's published by Redleaf Press (www.redleafpress.org)
Is there one available for the upcoming year? I would be VERY interested in that. My accountant does a really good job, although I can't help but think I could be making her life a little easier with a more organized system?
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  #6  
Old 12-30-2010, 05:05 PM
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Default Turbo Tax

Here's a typical situation when using tax software such as Turbo Tax. The software will tell you to enter your business expenses for Supplies. That's all it will say. Let's assume you spent $300 on supplies used 100% for your business and $1000 on supplies that were used by both your family and your business. Your time-space percentage is 40%. What do you put as your Supply expenses?

Answer: $700 ($300 + 40% of $1000). But you must know how to do this. The software won't mention shared supplies or 100% supplies. The software will only say Supplies.

Many providers give a copy of my annual Family Child Care Tax Workbook and Organizer to their tax preparer to make sure he or she is aware of the unique family child care tax rules. The book will be available as of January 17th.
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  #7  
Old 01-10-2011, 01:06 PM
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Smile In over my head

I have recently started keeping 2 children in my house and I am about to keep a 3rd one. I would only like to keep 4 to 5 children in my house as a Family Daycare. I have a Degree in Early Childhood Education but I am unfamilar with Family Daycare regulations and how to file taxes for the Family Daycare in MS.
If someone could inform me that would be wonderful.
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  #8  
Old 01-11-2011, 11:32 AM
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Default Filing taxes

All the tax rules we've been discussing are the same for every state since they are federal rules. You need to check to see if you are currently in compliance with your state child care regulations. Contact your local child care resource and referral agency or local licensing office. If you are not required to be licensed in your situation then you can deduct expenses like every licensed provider. If you are in violation of state rules then you can't claim house expenses on Form 8829 but you can claim all other expenses (mileage, food, toys, supplies, depreciation on furniture and appliances, etc.) on Schedule C.
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  #9  
Old 09-14-2015, 01:19 AM
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Default In-home Daycare Employee

My children's in-home daycare provider just recently hired me as a "helper" at the daycare. I am wondering what I need to do for filing and taxes (what to withhold, when to pay, where to pay, etc)? I am familiar with the more basic returns from my accounting/income tax classes in tech school a few years back, but I am at a loss here.

Her tax lady said that I should create my own daycare name and to get my own tax id number and file as my own business or something like that.. She made mention of a 1099 form.

What form do I actually need for that? Schedule C maybe?

How to I calculate what I need to pull out of my paychecks for my taxes, when do I send in my taxes(quarterly?), and where do I send them?

Thank you in advance for the help!
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  #10  
Old 09-14-2015, 08:24 AM
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Default helper

Quote:
Originally Posted by Unregistered View Post
My children's in-home daycare provider just recently hired me as a "helper" at the daycare. I am wondering what I need to do for filing and taxes (what to withhold, when to pay, where to pay, etc)? I am familiar with the more basic returns from my accounting/income tax classes in tech school a few years back, but I am at a loss here.

Her tax lady said that I should create my own daycare name and to get my own tax id number and file as my own business or something like that.. She made mention of a 1099 form.

What form do I actually need for that? Schedule C maybe?

How to I calculate what I need to pull out of my paychecks for my taxes, when do I send in my taxes(quarterly?), and where do I send them?

Thank you in advance for the help!
If you aren't in the business of providing child care services for other family child care providers, you are her employee, not an independent contractor. Therefore, she should be withholding Social Security and income taxes and should have workers compensation insurance to protect you if you become injured while working.

If you are in the business of providing child care services for other providers, then you need your own tax id # (EIN), a business name, register your name, advertise that you are looking to work for other providers, and use your own work contract. Then you would be an independent contractor and each provider that hires you should issue you a Form 1099 (if they pay you more than $600 in a year). You would then file quarterly estimated taxes using IRS Form 1040ES. And file estimated state income taxes.
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  #11  
Old 02-04-2017, 01:16 PM
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Default Im a little overwhelmed

I am an unlicensed daycare right now (waiting for the license) I only watch one child. I do keep records of how much I make and what I have been putting into the daycare(meals/supplies etc) I do not have a business EIN and I am a little overwhelmed in what needs to be filed for taxes.
What forms and do I need to have a tax id number?
Can I file with my personal taxes with my husband like we do every year?
I just need a little help in making sure I am filling correctly.
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  #12  
Old 02-04-2017, 03:36 PM
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Quote:
Originally Posted by Unregistered View Post
I am an unlicensed daycare right now (waiting for the license) I only watch one child. I do keep records of how much I make and what I have been putting into the daycare(meals/supplies etc) I do not have a business EIN and I am a little overwhelmed in what needs to be filed for taxes.
What forms and do I need to have a tax id number?
Can I file with my personal taxes with my husband like we do every year?
I just need a little help in making sure I am filling correctly.
You can get an EIN immediately by going to the IRS website and search for EIN. It will give you all the options on how to apply. You dont need forms just fill in or answer the information asked.
https://www.irs.gov/businesses/small...ber-ein-online

Go to Redleaf and buy Tom Copelands tax book and/or any of his other tax materials and it will tell you everything you need to know.
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  #13  
Old 02-05-2017, 09:11 AM
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Quote:
Originally Posted by Unregistered View Post
I am an unlicensed daycare right now (waiting for the license) I only watch one child. I do keep records of how much I make and what I have been putting into the daycare(meals/supplies etc) I do not have a business EIN and I am a little overwhelmed in what needs to be filed for taxes.
What forms and do I need to have a tax id number?
Can I file with my personal taxes with my husband like we do every year?
I just need a little help in making sure I am filling correctly.
You will be filing IRS Form 8829 Business Use of Your Home, Schedule C and Form 1040SE. Yes, you should continue to file jointly with your husband. Contact me if you have other specific questions: tomcopeland@live.com
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  #14  
Old 02-05-2017, 09:21 AM
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Quote:
Originally Posted by TomCopeland View Post
Sounds like you've done a great job in keeping your business records. You have several options now:

1) Hire a tax professional - Although this costs money, it may be a good idea to do in your first year so you can see how things are done properly. For a tax professional directory of people who have experience with family child care: http://www.nafcc.org/business/record_keeping.asp

I caution against using someone who is not familiar with family child care.

2) Use Turbo Tax or Tax Cut software to do your own taxes. This is advisable only if you already know how to fill out your tax return. The software will not help you if you don't know what you are doing. For example, the software will ask you to enter your Supply expenses. It won't tell you what are supply expenses and it won't tell you to enter on the time-space percentage of shared supplies. It won't tell you anything about the time-space percentage.

3) Use my 2010 Family Child Care Tax Workbook and Organizer. This book takes you through each tax form, line by line. Tens of thousands of providers have used this book over the years to do their own taxes. It's published by Redleaf Press (www.redleafpress.org)
This link for tax professionals with home daycare experience is not appearing to be working....
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  #15  
Old 02-05-2017, 09:22 AM
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Is there an alternative to MMK that helps organize all this tax stuff? I understand MMK is making some changes to Kid Kare or something like that and providers here do not seem impressed. I am just starting so I am in need of something ASAP and cannot wait for a program to "work out its kinks"....
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  #16  
Old 02-06-2017, 10:07 AM
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Originally Posted by CityGarden View Post
This link for tax professionals with home daycare experience is not appearing to be working....
Sorry! Here it is: http://www.nafcc.org/taxes
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