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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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Old 05-16-2019, 07:45 PM
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Natnat88 Natnat88 is offline
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Default T/S % Still Deductible Under New Tax Guidelines?

So after filing my 2018 taxes I actually faired well. The CPA informed me that I could no longer claim the T/S or any home utilities unless it was directly used ( EX: TV/internet). All other 100% daycare items were still good. CPA also told me to have the daycare pay monthly rent back to myself to make up for the loss in the T/S. Was trying to find literature on this change, but can't. Can anyone shed light on this?
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Old 05-17-2019, 10:07 AM
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TomCopeland TomCopeland is online now
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Default new tax law

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Originally Posted by Natnat88 View Post
So after filing my 2018 taxes I actually faired well. The CPA informed me that I could no longer claim the T/S or any home utilities unless it was directly used ( EX: TV/internet). All other 100% daycare items were still good. CPA also told me to have the daycare pay monthly rent back to myself to make up for the loss in the T/S. Was trying to find literature on this change, but can't. Can anyone shed light on this?
The new tax laws make no changes in your ability to use your time-space% on house expenses (property taxes, mortgage interest, house insurance, utilities, house repairs and house depreciation). There is no rule that says you can't claim utilities or any other house expense unless you use them 100% for your business. That is crazy. Maybe he/she is thinking that many providers no longer itemize their taxes, but that doesn't affect your ability to deduct these expenses on Form 8829. Ask him/her for something in writing that support his position. No, you can't pay rent to yourself and deduct this as a business expense unless you are a corporation or partnership. As a self employer business you are the owner of the business. Ask your CPA to clarify what she is saying because she is wrong.
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Old 05-17-2019, 11:32 AM
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Originally Posted by TomCopeland View Post
The new tax laws make no changes in your ability to use your time-space% on house expenses (property taxes, mortgage interest, house insurance, utilities, house repairs and house depreciation). There is no rule that says you can't claim utilities or any other house expense unless you use them 100% for your business. That is crazy. Maybe he/she is thinking that many providers no longer itemize their taxes, but that doesn't affect your ability to deduct these expenses on Form 8829. Ask him/her for something in writing that support his position. No, you can't pay rent to yourself and deduct this as a business expense unless you are a corporation or partnership. As a self employer business you are the owner of the business. Ask your CPA to clarify what she is saying because she is wrong.
It's always so good to read Tom's answers! Thank you, Tom!
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Old 05-18-2019, 11:59 AM
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Thanks so much for the clarification and will definitely be scheduling another meeting to get this straightened out.
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