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Daycare and Taxes>Years of Taxes Done Wrong???
Unregistered 06:05 PM 03-06-2018
I have been a provider for 8 years and been using HR block up until this year. We switched to a CPA and heís basically telling us everything is wrong. I am freaking out now.
1) Itís not time & space. Itís hours worked vs hours in the year. That the IRS expects the daycare children to be able to use the whole house. So going from 76%-81% to 30%
2) That the fridge we purchased canít be claimed at all because itís considered a personal item. Even thou I literally canít run my daycare without one. Saying that since we use it for personal and business it canít be claimed?
3) HR block messed up and didnít remove the depreciated van we sold in 2016. The depreciated it and gave us standard mileage on the vehicle, which he says is wrong. That we need to report a loss/gain from selling the car.
4) We purchased our house 4/2014 for 126,000 but on the paperwork it says 1/1/2013 and the total cost was 176,000. Pretty much everything about the house it wrong!

Can anyone help me? How bad is this?
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Country Kids 09:04 PM 03-06-2018
1. It is time and space
How much your family uses space vs. daycare uses
space/item/etc.

2. I'm thinking the fridge I think would be a depreciation
item.

3. Not sure on the van

4. You have never caught the error on your houses
paperwork?

Hopefully Tom can help you with this. Some tax preparer's are not familiar with child care's business side. If he isn't familiar he won't be doing them correctly properly. Honestly I have never heard to much great about H&R block though myself.
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MyAngels 07:06 AM 03-07-2018
I'm sure Tom will chime in, but it sounds like you need to find a CPA who is more familiar with the specific ins and outs of home childcare taxes. If there are mistakes on previous returns you can amend them for a certain period of time, I'm not positive on the time frame, but maybe three years.
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TomCopeland 09:53 AM 03-07-2018
Originally Posted by Unregistered:
I have been a provider for 8 years and been using HR block up until this year. We switched to a CPA and heís basically telling us everything is wrong. I am freaking out now.
1) Itís not time & space. Itís hours worked vs hours in the year. That the IRS expects the daycare children to be able to use the whole house. So going from 76%-81% to 30%
2) That the fridge we purchased canít be claimed at all because itís considered a personal item. Even thou I literally canít run my daycare without one. Saying that since we use it for personal and business it canít be claimed?
3) HR block messed up and didnít remove the depreciated van we sold in 2016. The depreciated it and gave us standard mileage on the vehicle, which he says is wrong. That we need to report a loss/gain from selling the car.
4) We purchased our house 4/2014 for 126,000 but on the paperwork it says 1/1/2013 and the total cost was 176,000. Pretty much everything about the house it wrong!

Can anyone help me? How bad is this?
1) No, the IRS does not expect a provider to use her entire house in the time-space% calculation. You must enter the number of square feet you use regularly or exclusively for your business on Form 8829. Then you must enter the number of hours you care for children and do other business activities when children are not present.
2) There is no rule that says you can't deduct something simply because you use it for business and personal use! Of course you can deduct part of the cost of the refrigerator, washer/dryer, stove, furniture, etc. The IRS Child Care Provider Audit Technique Guide clearly states this.
3) You can't claim both car depreciation and the standard mileage rate.
4) You base your house depreciation on the purchase price minus the value of the land at the time you bought it.
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Unregistered 10:19 AM 03-07-2018
Thanks everyone!
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MarinaVanessa 09:41 AM 03-08-2018
Buy a copy of Tom Copeland's book Family Child Care Record Keeping Guide. For yourself so that you get a better understanding of what you can claim, why, how to claim it, how to keep records etc and also to GIVE TO YOUR CPA along with your tax stuff. A lot of CPA's and tax preparer's don't know anything about family child care record keeping, there are special rules that we have.
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LittleScholars 10:47 AM 03-08-2018
Originally Posted by MarinaVanessa:
Buy a copy of Tom Copeland's book Family Child Care Record Keeping Guide. For yourself so that you get a better understanding of what you can claim, why, how to claim it, how to keep records etc and also to GIVE TO YOUR CPA along with your tax stuff. A lot of CPA's and tax preparer's don't know anything about family child care record keeping, there are special rules that we have.
I totally agree with this.

This is my third year having daycare taxes done and I've changed CPAs each year. This has been my experience:

Year 1: CPA had never done daycare taxes, I did ALL of the research and work (using Tom's books), he charged me a fortune and we left a lot of money on the table.

Year 2: I reached out to local, more seasoned daycare providers and got recommendations. We had an OK experience. She knew more about daycare taxes, but Tom's books saved me. I did most of the work and she charged us a reasonable rate. I ended up owing more than I should have.

Year 3: We are using a pricey and very well known CPA. He costs about $800 (this includes "free" consulting throughout the year), but he saved us so much money that he paid for himself. I did none of the work, and he set up us to have easier tax seasons in the future. This was worth it to use because my husband and I are both self-employed.

All of that is to say, I would keep looking for a CPA that best fits your needs. A great one may easily pay for himself/herself.
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Sunchimes 12:48 PM 03-09-2018
I bought Tom's books the first year, including both the Organizer and the Workbook. I filled out the Organizer. Then I gave the books to her, gave her a link to this forum, and paid for her to watch Tom's webinars. I think we are doing really well, but I haven't had them re-done to compare. I'm comfortable that we are in good shape. These days, I just do the Organizer and copies of any relevant posts from Tom's blog.
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