| Most child care providers know they can deduct | | | | services benefit both your business and your |
| the cost of food and supplies for their business on | | | | family, they once again need to have the time |
| their taxes. Some even know they can take a | | | | space formula applied to them in order to |
| substantial mileage deduction. But many home | | | | calculate your deduction. Use the figure that you |
| daycare providers miss some large deductions | | | | calculated from above and multiply it times the |
| that can really help trim your tax bill or increase | | | | total amount paid in a year for, say, your electric |
| your refund. This article deals with ten commonly | | | | bills to come up with a deductible amount. |
| missed deductions and how to apply them to | | | | Basically, any supply or service that is used to |
| your taxes. | | | | benefit your business can be at least partially |
| I am sure you have diligently kept your receipts | | | | deducted. |
| from last year and have added up your food | | | | Remember to include these items: electric bills, |
| costs. Did you also calculate the cost of your | | | | propane or natural gas, water bills, home security |
| consumable supplies? Maybe not! Consumable | | | | system fees, cable or satellite television, internet |
| supplies are the items used for your business that | | | | service (if you use the internet for your business |
| are, well, consumed and have to be purchased | | | | for advertising or looking things up or email), and |
| over and over again. Items like toilet paper, | | | | garbage and/or recycling pickup. All of these |
| tissues, napkins, paper towels, dish soap, laundry | | | | services are necessary for running a child care |
| soap, etc. fall into this category. All of these items | | | | business and are therefore deductible. Just |
| are either used by the children in your care or are | | | | calculate the total amount spent in a year for a |
| used more frequently because you have children | | | | service and then multiply it by your time/space |
| in your care. And all of them are partially | | | | formula calculation to get a total deduction. List |
| deductible on your taxes. If you buy these | | | | these out and give them to your accountant, it's |
| supplies strictly for child care and your family | | | | that easy! |
| doesn't use them, then these supplies are 100% | | | | There are occasionally times when you can |
| deductible. However, most of us don't separate | | | | deduct 100% of the cost of a service. This |
| out our toilet paper for daycare and family use. | | | | applies when a service is used exclusively for |
| So, in order to find out how much you can | | | | your business. For example, if you have a phone |
| deduct for these consumables, you need to apply | | | | line that is only used for your child care business, |
| the time/space formula to the total amount spent | | | | then you can deduct 100% of the fees for that |
| on these supplies in a year. The time/space | | | | phone line. Also, if your child care is run out of a |
| formula calculates how much time you spent | | | | separate building from your home, say a |
| doing daycare in a year compared to the number | | | | converted garage, then you can probably figure |
| of hours in a year, and also calculates the amount | | | | out the electricity for just that building and deduct |
| of space in your home that you use for your | | | | that cost at 100%. It is, of course, advantageous |
| business. Briefly, you need to calculate the number | | | | to be able to increase your deductions, so take |
| of hours you spent doing child care in a year. | | | | advantage of this if you can. |
| Then you need to divide that number by the | | | | The tenth and final deduction that is commonly |
| number of actual hours in a year (8760) to come | | | | missed is a deduction for work done on or |
| up with a percentage of time you spent providing | | | | services provided for your home. For example, |
| child care in the year. Finally, you need to calculate | | | | did you have new gutters installed? That cost will |
| the percentage of your home that you use for | | | | be at least partially deductible. Did you have your |
| your business and multiply this percentage times | | | | carpets cleaned? Again, that is a deduction. Did |
| the percentage of hours worked to get a final | | | | you have a repairman come to fix the |
| percentage. This final percentage is then multiplied | | | | refrigerator? Take a deduction for that! Save all |
| by the amount spent on consumables in a year to | | | | receipts for any work done so you can claim the |
| come up with the dollar figure of how much you | | | | deduction. You will need to speak with your |
| can claim as a business expense on the | | | | accountant about how much you can deduct for |
| consumables you purchased. | | | | services done, because it depends on the service |
| Here is a list of the most common consumables | | | | how the deduction is taken. Things like |
| used, though you may come up with a lot of | | | | refrigerator repair will probably be deducted based |
| others depending on your situation: dish soap, | | | | on the time/space formula. Carpet cleaning and |
| laundry detergent, dryer sheets, all cleaning | | | | other cleaning services may be 100% deductible. |
| products, Ziploc bags, aluminum foil, Saran wrap, | | | | Things like home improvements may have the |
| garbage bags, tissues, toilet paper, paper towels, | | | | time/space formula applied or they may be |
| baby wipes, hand soap, lotion, paper plates, paper | | | | depreciated, depending on the cost. These can be |
| cups, and air fresheners. There are many others | | | | great deductions, it is just a little more difficult to |
| that may apply to your home. Try to come up | | | | know how to calculate the total deduction on |
| with an exhaustive list that applies to your | | | | these items and should probably be done with the |
| situation. | | | | help of an accountant. |
| This next grouping of deductions I will deal with | | | | These ten tax deductions are fairly simple to |
| together, as they are all related. These deductions | | | | apply and can really bring a home daycare |
| deal with supplies and services for your home | | | | provider some much needed tax relief. It takes a |
| that you pay for. This includes utilities, garbage | | | | little extra time to calculate these items, but it can |
| services, internet service, and more. Since these | | | | definitely be worth it in the long run! |