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Daycare and Taxes>New DC Provider- Tax Help
TheGoodLife 01:13 PM 02-07-2013
I just started my home DC business in August, and bought the house in April (we needed a bigger home to have an exclusive DC area, so bought a new home before I started the business). Can anyone give me a rundown of what I will need to have ready for my tax preparer? I have my time-space ratio, enrollment, hours, receipts for most purchases (have a separate post about garage sale purchases w/o receipts). I'm not really understanding how depreciation for taxes works! Are there any special records I need since I just purchased my house before the DC opened?

I've bought a new kitchen table (the last one was too small), computer (shared for personal and business purposes), exclusive-use rocker for DC (not used outside of DC time), and a few other small items. My understanding is that certain small items (pack-n-plays, cots, baby swings, advertising signs, ect) can be deducted 100% as a write-off if used exclusively for DC, and that I can apply the time-space ratio to other small items (cheap patio furniture, playset swings, printer, ect) BUT I am confused as to what to deduct and what to depreciate. Also, how do I go about depreciating things that were already part of the house (fridge, dishwasher, furnace, cookware, ect)

I am not available for the upcoming taxes webinar on Tuesday the 12th, as my SIL is in town and giving my husband and I a Valentine's date, but any resources, responses, tips are GREATLY appreciated. Thanks in advance : )
TomCopeland 02:48 PM 02-07-2013
You've identified most of the items you need for your tax preparer. He/she should tell you what additional information you need.

Give your tax preparer records showing the purchase price of your home and the cost of the land when you bought the home. He/she will calculate your home depreciation deduction.

If you bought something that cost more than $100 you will likely depreciate the item. Your tax preparer will know how to do this.

You should conduct an inventory of all the items you owned in your home that you started using for your business in August. These include: furniture, appliances, toys, rugs, lamps, tv, computer, kitchen items, household items, lawn mower, snowblower, etc. You are entitled to depreciate their value. Take pictures of everything.

If you use items 100% for your business you can deduct 100% of the cost. If the items are also used by your family, use your time-space % to determine the business deduction.

In general, you deduct in one year items that cost less than $100. If they cost more than $100 you depreciate them. There are exceptions to this rule. If the item is used more than 50% in your business you can deduct the business portion in one year using the Section 179 rule.

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:
Tags:deductions, depreciation, taxes
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