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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 01-20-2019, 07:50 PM
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Default Start-Up Costs, Food Allowance - Legally Unlicensed

I am an UNLICENSED daycare provider (operating LEGALLY under AZ rules: can care for up to 4 children, with your own children not being counted in the ratio). I have 3 daycare kids and 1 of my own in my care.

1. Opened for business in 2018, but originally believed I would open in December 2017. I made various purchases in 2017 in anticipation of a 2017 opening (two biggest expenses were for new carpeting in daycare area- about $1200.00 & one other big purchase was a little over $600 from Discount School Supply). I have read that I can deduct up to $5000.00 for start up costs. I have receipts for my 2017 purchases- am I able to use those with the exact amount purchased (with the time-space percentage applied, which I'm also figuring out), or do I have to give items purchased a fair-market value (garage/thrift store pricing)?

2. Since I am operating legally according to AZ law, but am still unlicensed, am I able to deduct for food according to the IRS Standard Meal Allowance Rates (for 2018: Breakfast: $1.31; Lunch/Supper: $2.46; Snack: $.73)?

Any help would be greatly appreciated. Thank you!
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Old 01-21-2019, 07:00 AM
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If your paying taxes on your income I think the answer is yes.You probally need a form for deductions .I used an accountant that was an expert on childcare taxes.Tom Copeland has great books and info . I always looked at what I was feeding the children then worked the meals into my program .We did a breakfast "snack"served at 9 am a bread,milk and fruit or veggie.Parents brought children fed and everyone had the "snack at 9. Lunch and afternoon snackor dinner served after nap.I used the calendar to list who was here for each meal It was easy if you counted monthly.I didn't always but did write it each day Good luck save receipts for materials.
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Old 01-21-2019, 07:13 AM
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Other threads about legally unlicensed providers and taxes.

https://www.daycare.com/forum/tags.p...s+-+unlicensed
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Old 01-21-2019, 08:10 AM
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rosieteddy,

I appreciate your reply. Yes, I am declaring all of my income on my taxes (including a gift card I was given for Christmas). I registered for my EIN in 2017 and gave my families their end-of-year receipt for 2018 already. I do keep attendance records & what I feed them as well. Mine will be a little trickier, however, as I have some babies who only started solids at different times of 2018. Luckily, I do have those records to look back on.

I'm just confused on whether or not I can use the IRS standard rates or not. I had planned to use my receipts for everything they ate- but I found out after all of my spreadsheet record keeping that I would have had to keep all of our personal receipts for food (not used in daycare), as well.

I did just buy Tom Copeland's book on Record Keeping last night. I sent him an e-mail as well to figure out the difference between two 2018 tax books he has coming out. Not sure if I need both.

Thanks!
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Old 01-21-2019, 08:22 AM
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Blackcat31,

Thank you for your reply! I have seen most of those (though that specific link to all of them is helpful)! I have spent so much time the last week or two reading information that my brain hurts!

As stated in a different reply, I did just purchase one of Tom Copeland's books (and plan to purchase at least one of the 2018 ones). I think those may help.

I saw some conflicting information on whether or not I could use the standard IRS meal allowance rates or not (obviously, using my records to verify exact days & meals offered).

I'm also just not sure if I can use the full-price paid in Nov-Dec of 2017 for start-up costs or if I have to use fair market value. Some of the stuff purchased was not used by me or my family until the business opened in 2018.

Thanks for your reply!
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Old 01-21-2019, 11:17 AM
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Quote:
Originally Posted by dobs View Post
I am an UNLICENSED daycare provider (operating LEGALLY under AZ rules: can care for up to 4 children, with your own children not being counted in the ratio). I have 3 daycare kids and 1 of my own in my care.

1. Opened for business in 2018, but originally believed I would open in December 2017. I made various purchases in 2017 in anticipation of a 2017 opening (two biggest expenses were for new carpeting in daycare area- about $1200.00 & one other big purchase was a little over $600 from Discount School Supply). I have read that I can deduct up to $5000.00 for start up costs. I have receipts for my 2017 purchases- am I able to use those with the exact amount purchased (with the time-space percentage applied, which I'm also figuring out), or do I have to give items purchased a fair-market value (garage/thrift store pricing)?

2. Since I am operating legally according to AZ law, but am still unlicensed, am I able to deduct for food according to the IRS Standard Meal Allowance Rates (for 2018: Breakfast: $1.31; Lunch/Supper: $2.46; Snack: $.73)?

Any help would be greatly appreciated. Thank you!
You can use the standard meal allowance! Here's an article I wrote about start up expenses: http://tomcopelandblog.com/the-start...business-began
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Old 01-21-2019, 12:07 PM
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With using the standard meal allowance I did not need receipts. That's why I chose it.Just the meal and child count.
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Old 01-21-2019, 06:52 PM
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Thank you for that confirmation, TomCopeland!

& thanks to you, again, rosieteddy!
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