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Daycare and Taxes>Tax Help...I'm a Slacker
Daycarelady1979 12:35 PM 01-07-2013
Ok, so here's the situation (don't judge!)...

I'm starting to panic just a little because, truth be told, I did almost no record-keeping for my daycare business in 2012. I had a baby, I took 12 weeks off, business has been slow...do any of those excuses count??

I'm literally the girl who has receipts shoved in a shoe box from the whole year. It's a big hot mess. I have the receipts, they're just not organized.

What programs do you all use to keep track of your deductions? I noticed there is a program on Minute Menu, but its only free for a few days & I really can't afford to pay for anything at this time. I need something EASY Suggestions?

My plan is to go through all my receipts & enter them in slowly...my husband doesn't usually get his W2's until mid-February, so I have a little time to work on it.

I did, however, keep track of my income...and it way WAY less than any previous year. I don't know if that will hurt me or help me when it comes down to a tax refund. And with having the baby, I just really don't know what to expect.
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TomCopeland 03:05 PM 01-07-2013
Don't panic. It's easier than you think.
Step 1: Look at each individual receipt and put each item on the receipt into one of two categories: 100% business (only used by your business) or shared (used by your business and your family). Mark 100% items with a "B" and mark shared items with an "S." Forget about items that are strictly personal.
Step 2: Decide what expense category to call each receipt: toys, supplies, repairs, etc. If the receipt has more than one category of expense on it (toys and supplies), make a decision about what to call everything on the receipt. Either call everything toys or supplies. It doesn't matter what you expense category you put your expenses under.
Step 3: Once you have marked all receipts and put them in an expense category, add up the 100% items in each category and then the Shared items. Take the total of the shared items and multiply them by your time-space %. Then add the 100% items and time-space% amounts together. This is your deduction.
Step 4: Put your deductions on your tax forms.
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Daycarelady1979 05:10 PM 01-07-2013
Thank you!
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Michael 05:39 PM 01-07-2013
Remember Daycare.com and Tom Copeland's webinar “Tax Changes for 2012: How to Avoid Mistakes on Your Tax Return” on Tuesday, February 12, 2013 at 8:30-10:00pm Eastern Time.

For more information on registering, go to: http://events.r20.constantcontact.co...&llr=yatrx4cab
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kendallina 06:20 PM 01-07-2013
I save all of my receipts until the end of the year in big folders. It's now that I need to go through and organize/label/etc. So, you're not alone and I have no excuses and do it this way every year. I've just accepted my procrastination.
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nanglgrl 07:37 PM 01-07-2013
Do we also add the sales tax we paid on these items?
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itlw8 08:03 PM 01-07-2013
mine are almost as bad but I have an appt Feb 2 and if I change it I can't get a Sat. I WILL get it done. Thanks Tom that does make it seem easier to have a plan.
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Daycarelady1979 03:48 AM 01-08-2013
I feel so much better knowing I'm not alone.

I started out the year 2012 (as I always do) with great intentions of having a super-awesome filing system. But by the end of January, I had given up. LOL

2013 New Year's resolution = file & organize receipts in a timely fashion!
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TomCopeland 11:24 AM 01-08-2013
Originally Posted by nanglgrl:
Do we also add the sales tax we paid on these items?
Yes, you can deduct sales tax as well. If the item was used 100% for your business, deduct 100% of the sales tax. If the item was used for business and by your family, deduct the time-space % of the sales tax.
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Abigail 12:47 PM 01-08-2013
I don't want to look at 2012's yet as it was my first full year officially as of a few days ago! Now for 2013 I have kept track of everything and am working on making excel spreadsheets to calculate for me.

I decided to buy two of everything for tax organizing so I can do 2013 along with 2012. I bought 2 13-folder expansion binders for about $6 each and each tab will have a month's worth of house bills that are full sheets of paper and all my purchase receipts will go in a smaller manilla envelope that I got a 25 pack of. This way if I happen to "drop it" and receipts and papers go everywhere I only have to put the envelopes back in order, not receipts. I enter the receipts on the excel program PRIOR to putting it in the envelope but I plan at the end of the year to double-check everything. I have always purchased business items on separate receipts, but this year I will keep track of shared expenses. I would typically buy toilet paper or tissues once in a blue moon for daycare, but this year we're going to buy in bulk and use time/space just to keep it fair.......same goes with garbage bags and laundry detergent and dishwasher detergent......all going to buy in bulk to cut back on receipts.

Tom, can you tell me why it doesn't matter what "category" we place purchases under? I'm about to buy many shared expense items at the end of the month. I was going to buy tissues, paper towels, and ink from Sam's Club and was going to buy them in separate receipts to organizing, but does that make any sense? One is office supplies and the rest just supplies.

Tom, how many "categories" do I need to have or should I use? I have not started 2012's organizing of receipts but want to know also for 2013 how I should record items. THANKS
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TomCopeland 12:59 PM 01-08-2013
Originally Posted by Abigail:
I don't want to look at 2012's yet as it was my first full year officially as of a few days ago! Now for 2013 I have kept track of everything and am working on making excel spreadsheets to calculate for me.

I decided to buy two of everything for tax organizing so I can do 2013 along with 2012. I bought 2 13-folder expansion binders for about $6 each and each tab will have a month's worth of house bills that are full sheets of paper and all my purchase receipts will go in a smaller manilla envelope that I got a 25 pack of. This way if I happen to "drop it" and receipts and papers go everywhere I only have to put the envelopes back in order, not receipts. I enter the receipts on the excel program PRIOR to putting it in the envelope but I plan at the end of the year to double-check everything. I have always purchased business items on separate receipts, but this year I will keep track of shared expenses. I would typically buy toilet paper or tissues once in a blue moon for daycare, but this year we're going to buy in bulk and use time/space just to keep it fair.......same goes with garbage bags and laundry detergent and dishwasher detergent......all going to buy in bulk to cut back on receipts.

Tom, can you tell me why it doesn't matter what "category" we place purchases under? I'm about to buy many shared expense items at the end of the month. I was going to buy tissues, paper towels, and ink from Sam's Club and was going to buy them in separate receipts to organizing, but does that make any sense? One is office supplies and the rest just supplies.

Tom, how many "categories" do I need to have or should I use? I have not started 2012's organizing of receipts but want to know also for 2013 how I should record items. THANKS
It doesn't matter what category you put an expense in because all expenses get added together on the tax form. There is no IRS penalty for putting your toy expenses under car expenses.

Don't buy items and get separate receipts for each category of expense. It's too much paperwork. Instead, put everything on one receipt and then decide what to call everything on that receipt.

Except for house expenses, all your expenses will go on Schedule C. So, you must enter them on one of the expense categories listed there. The back of Schedule C allows you to create your own expense categories. In my book Family Child Care Record Keeping Guide I list over 1,000 allowable expenses and I list them under the expense categories that appear on Schedule C. I created several additional expense categories that you can put on the back of Schedule C: food, toys, cleaning supplies, activity expenses and household items. Minute Menu lists these same categories.

On February 12th I'll be doing a webinar: "Tax Changes for 2012: How to Avoid Mistakes on your Tax Return" To register http://events.r20.constantcontact.co...&llr=yatrx4cab
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Abigail 01:24 PM 01-08-2013
OK so I see on page 117 starts you list you're referring too.

1. Food
2. Toys
3. Household Items
4. Cleaning Supplies
5. Activity Expenses


So you have lots listed under Household items would that include ink? If I were to spend $100+ at Sam's for 10 packs of Tissues, Multi-Packs of ink, and boxes of papertowels would I put that under 3. Household Items? I am buying them all at the same place, but originally thought I would just buy tons of tissues and have a separate receipt for each item. LOL. Are these the five categories I should keep in mind when making purchases?

Which category would I put craft supplies under since I buy those most often?

Also, since I don't think I've ever printed anything for myself and all my ink goes to daycare things which I change out monthly or more is it okay to claim it all business for purchasing my printer last year along with all the ink I use? I purchased it for daycare, but it's our only printer. We've printed out monly household bills, but only to save for daycare taxes. We don't print anything for us that I can recall. I don't feel putting any ink under shared expenses would be fair or the printer.
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nanglgrl 03:52 PM 01-08-2013
Originally Posted by TomCopeland:
Yes, you can deduct sales tax as well. If the item was used 100% for your business, deduct 100% of the sales tax. If the item was used for business and by your family, deduct the time-space % of the sales tax.
Thank you Tom! You are wonderful for taking your own time to help us so often. You must have had an awesome provider in your formative years!
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heyhun77 09:41 PM 01-08-2013
And I was always told to keep a large envelope with all your non-business receipts for the year because in the event of an audit it can make a point when the IRS tries to argue you claim everything as a shared expense if you have a big pile of personal receipts to prove that not everything is a business expense.
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TomCopeland 12:07 PM 01-09-2013
Originally Posted by heyhun77:
And I was always told to keep a large envelope with all your non-business receipts for the year because in the event of an audit it can make a point when the IRS tries to argue you claim everything as a shared expense if you have a big pile of personal receipts to prove that not everything is a business expense.
It is a good idea to keep all receipts (business and personal) as you say. I've seen audits where the provider had a much easier time claiming her business expenses because she could show that she wasn't trying to claim everything.

Join me for a webinar “2012 Tax Changes: How to Avoid Mistakes on Your Tax Return” Tuesday, February 12th at 8:30-10:00pm Eastern Time. The cost is $25 (100% tax deductible!). To register: http://events.r20.constantcontact.co...&llr=yatrx4cab
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TomCopeland 12:14 PM 01-09-2013
Originally Posted by Abigail:
OK so I see on page 117 starts you list you're referring too.

1. Food
2. Toys
3. Household Items
4. Cleaning Supplies
5. Activity Expenses


So you have lots listed under Household items would that include ink? If I were to spend $100+ at Sam's for 10 packs of Tissues, Multi-Packs of ink, and boxes of papertowels would I put that under 3. Household Items? I am buying them all at the same place, but originally thought I would just buy tons of tissues and have a separate receipt for each item. LOL. Are these the five categories I should keep in mind when making purchases?

Which category would I put craft supplies under since I buy those most often?

Also, since I don't think I've ever printed anything for myself and all my ink goes to daycare things which I change out monthly or more is it okay to claim it all business for purchasing my printer last year along with all the ink I use? I purchased it for daycare, but it's our only printer. We've printed out monly household bills, but only to save for daycare taxes. We don't print anything for us that I can recall. I don't feel putting any ink under shared expenses would be fair or the printer.
I created the five expense categories you identified to capture all expenses that don't fit in easily to the expense categories printed on Schedule C. You can create your own if you want. If you bought tissues, ink for your printer and paper towels on one receipt, you could call everything Supplies or Household Items or Office Expenses. It doesn't matter which you choose.

You can call craft supplies whatever you want. I would suggest calling them Activity Expenses.

If you use your printer ink 100% for your business, deduct 100% of the cost. If you ever used the printer for personal purposes, don't deduct 100%. Maybe deduct 95% or 80% or your time-space %. If you are going to use something other than 100% or your time-space % then you should make some notes about why you used the number you did. Tracking your actual use for a month or two would be best.

Join me for a webinar “2012 Tax Changes: How to Avoid Mistakes on Your Tax Return” Tuesday, February 12th at 8:30-10:00pm Eastern Time. The cost is $25 (100% tax deductible!). To register: http://events.r20.constantcontact.co...&llr=yatrx4cab
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