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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 09-30-2010, 06:48 PM
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Default How Much Do You Pay In Taxes Each Year??

This is my first year in childcare and I've been very good about recording expenses but I'm just wondering what I can expect to pay in taxes at the end of the year.

My husband is thinking it could be about $7,000 so I'm freaking out a little. I know of course it all depends on individual expenses, number of kids and a million other factors but I'm just trying to get a ballpark idea.

Thanks everyone!
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Old 09-30-2010, 07:42 PM
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The self-employment tax rate is around 15.3% I believe. I don't know how much you'll pay in income tax, though, since that all depends on your adjusted gross income.
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Old 10-01-2010, 03:56 AM
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Do you save money monthly for taxes?
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Old 10-01-2010, 06:35 AM
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I make estimated tax deposits quarterly. I have heard of some providers that increase their spouse's withholding to cover the additional tax that may be due.
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Old 10-01-2010, 06:47 AM
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Last year was my first year doing taxes, And I claimed a loss, I don't think I'll claim a loss this year I think I'll maybe pay on taxes on a max of $5000 which would be like $750, but that will just come off what my husband would be getting back, so far this year, my income is right at about 18000, and I have 12000 in expenses, I have $1250 so far to deduct in mileage and $2750 to deduct in meals going by the standard meal allowance, so if I were filing today I would be paying taxes on about $1800, but I also have a carryover from last year of like $1300, because I claimed a loss my first year, and I also know there are things I haven't included yet, so I can bring it down even lower.
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Old 10-01-2010, 06:58 AM
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Originally Posted by Jewels View Post
so far this year, my income is right at about 18000, and I have 12000 in expenses, I have $1250 so far to deduct in mileage and $2750 to deduct in meals going by the standard meal allowance, so if I were filing today I would be paying taxes on about $1800
This will be my first full year of claiming (last year was only 3 months), I really want to claim everything I can so my taxable income is very little....what are you ladies claiming to get your expenses up so high? I am finding a lot of my expenses are only time space percent since I have kids of my own that play with toys.

I am claiming my cleaning supplies as Time/space percent..is this right or should I be doing 100%? Besides the obvious, such as elect., heating fuel, phone, cable, yard mantainance, art supplies, toys, printer ink, ect....what else can I claim? I don't want to miss a thing!!
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Old 10-01-2010, 07:22 AM
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NY- claim gas/mileage, your time percentage should include ALL hours you had children in care and hours used for planning/preparing/cleaning (anything to do with the daycare) so that will get your time % up, make sure you are claiming all the space you use for your daycare..... even if it's just the small front porch where parents stand until you open the door for them, your garage (if it has ANY toys stored there), the extra bedroom even if it ONLY holds a printer you use for daycare, the hallway that gets you from one room to another, etc. Also, if you have a room that is EXCLUSIVELY used for ONLY daycare that brings your percent up alot more! Just a few examples....
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Old 10-01-2010, 07:29 AM
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Health insurance premiums, tax prep. I'll have to think of more.
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Old 10-01-2010, 08:02 AM
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my time space percentage is 44% about, and so every month 44% of my mortgage is $717 every month, so that adds up, my phone, cable, internet, insurance(daycare, and household) all toys, cleaning supplies, any furniture, anything for my yard, flowers, grass seed, fertilizer, paint, most everyhting can be claimed at least time/space.
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Old 10-01-2010, 10:34 AM
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Check out Tom Copeland's books, he has all of the information you'll need about deductions in one place - Family Child Care Record Keeping Guide.
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Old 10-01-2010, 10:42 AM
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Check out Tom Copeland's books, he has all of the information you'll need about deductions in one place - Family Child Care Record Keeping Guide.
I ordered that book last week and I cant wait to see if the mailman brings it today! **Ok, I'm done being off topic**
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Old 10-01-2010, 11:37 AM
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Originally Posted by kpa0627 View Post
NY- claim gas/mileage, your time percentage should include ALL hours you had children in care and hours used for planning/preparing/cleaning (anything to do with the daycare) so that will get your time % up, make sure you are claiming all the space you use for your daycare..... even if it's just the small front porch where parents stand until you open the door for them, your garage (if it has ANY toys stored there), the extra bedroom even if it ONLY holds a printer you use for daycare, the hallway that gets you from one room to another, etc. Also, if you have a room that is EXCLUSIVELY used for ONLY daycare that brings your percent up alot more! Just a few examples....
Thanks for that...most of that I covered, except my garage space! I store snowsleds in there, will that count? I have a HUGE garage, am I only allowed to claim a small corner though for snowsleds?

This year I moved my daughter out of one room and bunked her with my other daughter so I have one room I do use exclusively for daycare now...it's a very small room, but I bet it will help.

Thanks everyone!
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Old 10-01-2010, 11:52 AM
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NY- I just got done reading the Record Keeping Book by Tom Copeland and from my understanding if you store anything daycare related in a garage you can count that whole space as daycare space.... so that should bring up your space % alot. Also, he says to try not to have any rooms that don't have any daycare related items in it as it will bring your space % down a lot. So, for instance I have a printer in our extra bedroom.... it's the ONLY thing I use in there that's daycare related but now I get to count that square footage....
Don't forget your laundry room either. As you use that to was cot sheets, blankets, possibly their clothes that are dirty, towels used to wipe tables down after they eat, etc. I highly recommend Tom Copelands books.... after reading them I realized how much I can deduct that I wouldn't have even thought about at all!!
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Old 10-01-2010, 04:23 PM
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Quote:
Originally Posted by My4SunshineGirlsNY View Post
This will be my first full year of claiming (last year was only 3 months), I really want to claim everything I can so my taxable income is very little....what are you ladies claiming to get your expenses up so high? I am finding a lot of my expenses are only time space percent since I have kids of my own that play with toys.

I am claiming my cleaning supplies as Time/space percent..is this right or should I be doing 100%? Besides the obvious, such as elect., heating fuel, phone, cable, yard mantainance, art supplies, toys, printer ink, ect....what else can I claim? I don't want to miss a thing!!
In MI, if we accept DHS subsidy payments on behalf of our clients, the government takes out union dues (without our permission) and that is deductible. Don't forget that in your time space percentage, you can also use the time you spend doing daycare-related work but you are not open or do not have kids. For example, time spent cooking or preparing meals for the next day, on calls with potential clients, conducting interviews, cleaning, etc. Check out Minute Menu Kids (if you have it). It has a ton of things listed. It is truly worth the money (annual fee) and, as long as you record things as you go throughout the year, all you need to really do is print the reports and it calculates everything for you.

Here are some other things to think about: toilet paper, paper towels, soap, diaper wipes, printer paper, folders, first aid kit and supplies, training, CPR and First Aid course fees, licensing fees, professional organization fees, field trip fees (including parking), charges to have your ducts cleaned (or furnace or hot water heater inspected), shovel and salt for the driveway (for winter months in colder climates), napkins, tissues, dish soap (you do wash the DC kids' dishes, right?), laundry soap (you do wash the wash cloths and towels they use throughout the day, right?), dryer sheets, all cleaning supplies, Ziploc bags, garbage bags (they do create extra garbage, right?), lotion, air fresheners (because sometimes they do leave odors that we have to exterminate from the air), etc.

Usually you can deduct almost anything that costs you money, time, or mileage. However, if you are unsure, ask yourself these questions:
1) Did I spend money, time, or mileage taking care of some thing to make my daycare business successful?
If no, you can not deduct.
If yes, go on.

2) Money: Did I use the "daycare" item for both daycare AND non-daycare purposes?
Time: Did I spend that time doing daycare AND non-daycare activities?
Mileage: Did I spend mileage doing daycare AND non-daycare things or errands?
If yes, use time-space percentage.
If no, use 100% for your calculation (exclusively for daycare).

This is not a foolproof test, but it works MOST of the time.
For example, you go to the grocery store to buy groceries for your family and for the daycare. This test would not work because #1 would be yes (deductible), but on #2, you would use T/S % (according to the rule). But if does not matter if you are buying non-daycare items. You would have used those 20 miles to go to the grocery store even if you weren't buying non-daycare items. So you can deduct the full mileage amount.

However, when you are talking about your electric bill, you cannot calculate how much is personal versus business expense, so you need to use T/S % because the electricity is not exclusively being used for daycare purposes only.

I hope this makes sense. Just remember: almost everything that costs you money, time, or mileage COULD be deductible. So you need to look at it through those lens and you will find your taxable income drop significantly. My first full year, I ended up deducting well over 1/2 of my entire income as expenses. And I'm sure I could have deducted more. But I was new to it and overlooked some things.

Of course, this is based on my personal experiences and advice I have received. I am not an accountant or an attorney, so I would check with them first. Just be aware that so much of what you spend time, money, or mileage on MAY be deductible and it's ALWAYS worth asking your accountant about.
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Old 10-01-2010, 07:39 PM
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Thank you for that info...I do have Minute Menu and I LOVE it!! Well worth the money..honestly I don't know how providers keep books without it! It's that handy to me. I keep adding my expenses as I go and I just print out my reports at the end of the year. It makes doing taxes so much easier. It prints out my total mileage and calculates my mileage deduction for me. I can't say enough good things about it!
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Old 10-02-2010, 07:40 AM
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Tom copeland said in a seminar, that with mieage, your trip needs to be for something more than 50% daycare to claim the mileage, so if you go to target, and your purpose is 50% or more for strictly daycare, than you can claimthe mileage, but if the majority is stuff you need is not exclusively for daycare, then you shouldnt claim the mileage.
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Old 10-02-2010, 08:08 AM
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Originally Posted by My4SunshineGirlsNY View Post
Thanks for that...most of that I covered, except my garage space! I store snowsleds in there, will that count? I have a HUGE garage, am I only allowed to claim a small corner though for snowsleds?

This year I moved my daughter out of one room and bunked her with my other daughter so I have one room I do use exclusively for daycare now...it's a very small room, but I bet it will help.

Thanks everyone!
I agree with you. I set up a full daycare in my breakfast room so I use exclusively too. The daycare kids are still using in my living/dining room, hall for the restroom and the backyard. The bedrooms are off limited!
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