Must Haves for Childcare Taxes
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There are a few things that can make tax time a lot easier for a childcare provider. Childcare taxes are fairly complicated and involved, but you can do them with no problem if you have a few tools to help you along the way. It’s an important part of running a home daycare.
If you ever have any childcare and taxes questions, I highly recommend visiting Tom Copeland’s very helpful website. He’s a tax advocate for childcare providers and he knows what’s what! If you get into a sticky situation like an audit, he’ll even help you get through that.
If you break down the tax situation, you’ll be able to handle it little by little. Tom’s “Family Childcare Record Keeping Guide” is a great resource to help you out with getting organized. I have learned so much from reading Tom Copeland daycare taxes books!
Receipt organizer for childcare and taxes
The first thing you need to do for your childcare and taxes is to make a place where all receipts go. You need every single one so you can optimize your deductions and save the most money. I have a drawer in my desk where I toss them and when they build up, I log them on a spreadsheet I made on excel.
It doesn’t matter if you do them on the computer or write them in a notebook, just find a place where you can record them and add them up. Excel is awesome because it does all the math for you. I love that part. There are programs on the computer that will help you with this as well.
Tax deductions for home daycare business
You also need to have a filing system for all of your personal bills for organizing childcare and taxes. Utilities, internet, and other things may be deductible on your taxes, so you need a record of what you paid. I have spreadsheets on excel to add those up for me as well. What is deductible and how much is also covered in Tom Copeland daycare taxes book “Family Childcare Record Keeping Guide”. Seriously, you cannot live without this book!
This is NOT a list of tax deductions for home daycare providers, it’s a list of what you need to gather and total to read through the record keeping or tax workbook from Tom Copeland and see what is deductible for you.
Some of the main childcare taxes categories you will need to have totals for are:
- Food Expense (Record your number of meals served also)
- Activity Expenses
- Vehicle Expenses (you’ll need a list of all the miles you drove for business and don’t forget trips to the store for supplies)
- Depreciation (for your home and big dollar purchases)
- Advertising (t-shirts, business cards, etc)
- Office Expenses (printers, ink, paper, pens, etc.)
- Utilities (don’t forget cable, satellite, cell phone, internet, etc.)
- House Expenses (anything needed to maintain your home in a lovely manner to attract clients)
- Yard Expenses (flowers, hoses, lawn equipment, etc.)
- Education Expenses (training for you, a degree is not deductible, but training you pay for are)
- Repairs and Maintenance (upkeep items for your home and yard, things you replaced because the children broke them)
- Rent or mortgage (if you own your home, you’ll get a statement with your taxes, insurance and everything on it, you’ll need that. Mortgage is not deductible but part of the interest is)
There are many more depending on what you’ve done throughout the year. Just be thinking about what you need to save records for. Anything you spent to run your business is deductible either in part or whole.
Family day care tax guide
To prepare your childcare taxes, you’ll need a list of income received from your parents, income from subsidy payments, and income from the food program. Also, any w-2s from second jobs or your spouse’s jobs.
You’ll also need a list of hours worked totaled up for the year, estimating is perfectly fine.
Whether you do your childcare taxes yourself (totally doable with Tom’s book) or use a tax preparer, you NEED this workbook. “Family Child Care Tax Workbook and Organizer”
It will help you navigate what receipts you need and how you need to log them. This will make filling out your forms much easier as well as help guide your tax preparer. Many tax preparers AND IRS workers to be honest, don’t fully understand the tax laws when related to childcare. It’s a unique business so that makes it complicated.
Side note: Most tax preparers are unfamiliar with the complexity of childcare and taxes. You may be missing out on lots of deductions if you aren’t doing your taxes yourself. If you use a tax preparer, I still recommend taking the tax workbook with you and if your preparer won’t use it, I’d look for someone else.
You will need to go to irs.gov and print out each of the following forms to begin with. I print out two. One so I can use pencil and erase and scribble until I get it right. The other I fill out with a pen, nice and neat once I have finished all of my changes. And you’re going to need an EIN number for your home daycare business taxes.
You’ll need the following forms:
- 1040, Schedule A (if you itemize)
- Other assorted forms if you qualify for earned income credit, etc.
- Schedule C, profit or loss of a business
- Schedule SE, self-employment taxes
- 8829, business use of your home
- 4562, depreciation
You will need to compile a list of hours worked in your home. If the kids were present or not, if you were cleaning up after them, cooking for them, lesson plans, TAXES, whatever, record that time. You can record it for a month and then estimate the rest of the year if you’d like. The more hours you worked, the higher your deductions, so don’t cheat yourself.
Home daycare tax deductions
The first thing you’ll need to know for your childcare taxes is your time/space percentage. Tom Copeland daycare taxes book tells you how to figure it. It’s a complicated process, but you can totally do it.
The first form you will start with is your schedule C. That’s where you record your income and your expenses. You won’t be able to fill it out entirely. Once you get to the bottom section, you’ll have to go to the 8829 and complete that.
Tom’s workbook, the “Family Childcare 2018 Tax Workbook and Organizer” will walk you through all the forms step by step. Just take one page at a time and do what it tells you. You’ll be finished before you know it.
If you have all of your payments and expenses logged and organized, your taxes will be much easier to handle. Get that done and you’ll feel more empowered to tackle those forms.
Grab these books, some paper and a calculator. Get ready to get down to business. That way when all the other forms you need arrive in the mail, you’ll be ready to take care of things. This year, make a goal to go through and record your expenses and payments monthly so at this time of year, most or all of it will be handled. If you have a tax preparer, you can order your workbook and just drop it off. If you don’t, you can print your forms, and get after it.
I have done my own childcare taxes for over 20 years of business. As long as I have my workbook each year, it’s no problem at all to fill them out fairly quickly and get them done right. Doing them yourself can save you a ton of money too. Even if you think you can’t do it, I think you can!
Use this printable editable end of the year daycare receipt to give to your daycare families at the end of the year. You’ll have it ready to go whether you’re an excel expert, or even still just love using paper and pen. I want to help any way I can for as many people as I can.
Do you need more help with parents who bring kids to daycare sick, how to ask for your paycheck, how to plan a menu, or what goes in contract, check out more articles on the blog.
For more tips for daycare providers, click here.
Were you able to link the Printable Daycare Tax Receipt. If not can you send it via email at email@example.com. Thanks!
Your post was extremely helpful! Thank you!
So glad it could get you started. Thanks for checking it out!
Hi, I bought a BBQ and wanted to know if I can claim it as well as propane and any utensils used on it. Also should I file it under a yard expense.
You can if you use it to prepare food for the kids or use it for entertaining daycare families at a party or something like that. You would only be able to claim your time space percentage though, not 100%. You can file it under yard expense or household expense or activity expense if it’s used for events. There’s no penalty for using the wrong category. 🙂 I hope that helps.
Excellent article for us providers – thank you. I usually write off some membership fees, for example – zoo fees, the arboretum and other areas that have entrance fees for our field trips.
Thank you and thank you for checking it out. Those are totally deductible as well, awesome job!
This is great. Some of my receipts seem to fade after just a couple of months. I would recommend scanning them or making a copy of them as a back up!
Good tip, we do have to do that with some. Thanks!
Great post! I am a big fan of Tom Copeland when it comes to childcare taxes. 🙂
Thank you, me too!
Tax help is always a blessing! Thanks for sharing – looks like there are some great resources here! It’s so great that you broke everything down into manageable pieces.
Thank you for checking it out.
I didn’t know about Tom’s workbook and organizer. I’ll have to take a look at that. Great post, very helpful!
You gotta have it. It’s great! 🙂 Thanks for reading.
You have thought of everything and I think it’s great that you are sharing all of these tips with other childcare providers!
Thank you so much!
Thanks for all the good advise 🙂
Thanks for reading it!