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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 12-26-2013, 10:10 PM
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Question 1st Year Taxes...Overwhelmed!

I will start by saying I just bought a used edition of Tom copelands family child care record keeping that has the 1000+ tax deductions.. literally 5 min ago!

However, it wont be here until jan 1st and I have questions NOW!

1. Time/space %-

space: I use my entire house daily for daycare. downstairs ALL DAY and the upstairs during nap times and 2 closets for storage of crafting materials and extra clothings for the daycare kids should one have an accident etc. and other things. The only part of the house NOT used is the Master Suite. So do I figure out the sq ft of the whole house EXCEPT the master suite and use that or do i have to figure it differently since the rest of the upstairs is only used a portion of the day?

also, when its too cold or rainy, we use my garage as indoor "outdoor" play. We have it heated and cooled, and we have trikes and ride on toys, push toys, balls etc. in there to entertain, as well as a computer that the kids can access ABC mouse.com and other educational things on. Do I get to count the garage in my space? (it's a finished garage w/ heat and air but has a concrete floor and a garage door.)

TIME: My "open" hours are 630a to 630p. I allow "drop ins" with a 30 min notice if I have a space available. So I am always open during those hours no matter what. However, I don't always have kids at 630am.. Do I only count the time that I actually HAVE kids in my care or do I get to claim the full 12 hours I am "open"


I have a thousand other questions too but this will be it for this post!

(p.s. yes I have a CPA to do my taxes.. just trying to figure some stuff out ahead of time so I know what I will need to take with me if i'm not thinking about something!)
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Old 12-27-2013, 01:36 AM
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Welcome to the forum. You can find a lot here: http://daycare.com/forum/tags.php?ta...ace+percentage

Tom also does a webinar right here on Daycare.com. Last year we had a full capacity of 100 members attending. I will be putting up information about this year's webinar soon. Don't worry, you are in good hands here. Suggest you also take advantage of our TAG search. I tag most of the posts here. So if you start typing "deductions" in the tag search, you will see all the other tags in a drop down window. Let me find those links for you.

Tag search: http://daycare.com/forum/tags.php

Time space list: http://daycare.com/forum/showthread.php?t=27284

http://daycare.com/forum/showthread.php?t=27327

Last edited by Michael; 12-27-2013 at 01:46 AM.
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Old 12-27-2013, 10:08 AM
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use a tax guy
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Old 12-27-2013, 01:00 PM
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Quote:
Originally Posted by Punkin.Butts View Post
I will start by saying I just bought a used edition of Tom copelands family child care record keeping that has the 1000+ tax deductions.. literally 5 min ago!

However, it wont be here until jan 1st and I have questions NOW!

1. Time/space %-

space: I use my entire house daily for daycare. downstairs ALL DAY and the upstairs during nap times and 2 closets for storage of crafting materials and extra clothings for the daycare kids should one have an accident etc. and other things. The only part of the house NOT used is the Master Suite. So do I figure out the sq ft of the whole house EXCEPT the master suite and use that or do i have to figure it differently since the rest of the upstairs is only used a portion of the day?

also, when its too cold or rainy, we use my garage as indoor "outdoor" play. We have it heated and cooled, and we have trikes and ride on toys, push toys, balls etc. in there to entertain, as well as a computer that the kids can access ABC mouse.com and other educational things on. Do I get to count the garage in my space? (it's a finished garage w/ heat and air but has a concrete floor and a garage door.)

TIME: My "open" hours are 630a to 630p. I allow "drop ins" with a 30 min notice if I have a space available. So I am always open during those hours no matter what. However, I don't always have kids at 630am.. Do I only count the time that I actually HAVE kids in my care or do I get to claim the full 12 hours I am "open"


I have a thousand other questions too but this will be it for this post!

(p.s. yes I have a CPA to do my taxes.. just trying to figure some stuff out ahead of time so I know what I will need to take with me if i'm not thinking about something!)
You can count a room as regular use if it's used in your business at least 2-3 times per week. Sounds like that's true for you for all rooms except your own bedroom. Count the garage as part of the total square feet of your home and also count it as regular use. Add up all the square feet of the regular use rooms and divide them by the total square feet of your home. The result is your Space?

Count the hours children are present in your home, not the hours you are open. Then add to this the number of hours you do business activities in your home when children are not present. So, if the first child arrives at 6:30am and you are doing business cleaning from 6-6:30, you can count the time starting at 6.
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Old 12-27-2013, 02:40 PM
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All CPAs are not created equal. My BIL is a CPA and had no idea of the details of daycare taxes. My regular CPA was the same way. I bought Tom's Tax Workbook and Organizer and I also got his Tax Companion. Between those 2 books and her willingness to read them and to read Tom's blog, she did a great job on my taxes. If I hadn't told her what I had learned on this forum I don't think she would have gotten all of my exemptions. So, my suggestion is that you talk openly to your cpa and offer use of those books. I think my CPA has picked up some new clients because of her new knowledge.
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Old 12-27-2013, 11:31 PM
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Quote:
Originally Posted by TomCopeland View Post
You can count a room as regular use if it's used in your business at least 2-3 times per week. Sounds like that's true for you for all rooms except your own bedroom. Count the garage as part of the total square feet of your home and also count it as regular use. Add up all the square feet of the regular use rooms and divide them by the total square feet of your home. The result is your Space?

Count the hours children are present in your home, not the hours you are open. Then add to this the number of hours you do business activities in your home when children are not present. So, if the first child arrives at 6:30am and you are doing business cleaning from 6-6:30, you can count the time starting at 6.
ok so I followed this advice. unfortunately I only had less than half the year to count for time since i opened mid july. However, my time % is 15% and my space is 92% for a t/s% of 14.65%... this is gonna hurt me isn't it? being so low? luckily i only made 3500$ this first year, but I do have all my expenses, depreciations, deductions on inventory etc. to count too so I should come out pretty even or ahead still I think.?!? thank you!
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Old 12-27-2013, 11:33 PM
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Quote:
Originally Posted by Sunchimes View Post
All CPAs are not created equal. My BIL is a CPA and had no idea of the details of daycare taxes. My regular CPA was the same way. I bought Tom's Tax Workbook and Organizer and I also got his Tax Companion. Between those 2 books and her willingness to read them and to read Tom's blog, she did a great job on my taxes. If I hadn't told her what I had learned on this forum I don't think she would have gotten all of my exemptions. So, my suggestion is that you talk openly to your cpa and offer use of those books. I think my CPA has picked up some new clients because of her new knowledge.
I actually got a CPA who is perfect for us! My husband has a lot of overseas/foreign income.. which is hard to do taxes with.. and I have the daycare. Well.. the CPA we found specializes in overseas income and his wife is a daycare owner so he is very aware of all the exemptions and deductions. I got super super lucky!!
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Old 12-28-2013, 10:07 AM
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Originally Posted by Punkin.Butts View Post
ok so I followed this advice. unfortunately I only had less than half the year to count for time since i opened mid july. However, my time % is 15% and my space is 92% for a t/s% of 14.65%... this is gonna hurt me isn't it? being so low? luckily i only made 3500$ this first year, but I do have all my expenses, depreciations, deductions on inventory etc. to count too so I should come out pretty even or ahead still I think.?!? thank you!
Since you were in business for only part of the year, add up all the hours you worked in your home from mid July - December 31st, and then divide by the total number of hours there were from mid July - December 31st. Don't use the total number of hours in the year. This will give you a much higher time %. You only get to deduct house expenses from mid July - December 31st.
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Old 01-21-2016, 05:45 PM
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Since you were in business for only part of the year, add up all the hours you worked in your home from mid July - December 31st, and then divide by the total number of hours there were from mid July - December 31st. Don't use the total number of hours in the year. This will give you a much higher time %. You only get to deduct house expenses from mid July - December 31st.
What about hours before you have kids enrolled? I am talking about getting ready for interviews, advertising on craigslist, preparing your home for licensing inspection and general upkeep to be ready for interviews, how much of that can count before kids are enrolled?
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Old 01-22-2016, 11:13 AM
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What about hours before you have kids enrolled? I am talking about getting ready for interviews, advertising on craigslist, preparing your home for licensing inspection and general upkeep to be ready for interviews, how much of that can count before kids are enrolled?
You can count all of these hours. Keep at least two months of careful records of these hours and use the average for the rest of the year.
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Old 01-22-2016, 02:01 PM
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You can count all of these hours. Keep at least two months of careful records of these hours and use the average for the rest of the year.
Thank you
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