Today TaxMama hears from Beverly in AK, who tells us, “I’m starting a daycare center and was wondering which of the items I purchase that can be deducted?”
Dear Beverly,
How wonderful. Now you’ll always hear the patter of little feet around the house. And their screams…
Just about anything you buy for the business will be deductible, either as a direct expense,
or using depreciation.
Since you’ll be buying food and household supplies specifically for the children, when you
go to the market, separate the stacks of personal and school purchases on the conveyor belt at the check-stand. Pay for the children’s groceries with a separate check or credit card.
When you pick up supplies to educate, entertain and care for the children at office supply stores, toy stores, gift shops or other stores, again – try to keep the purchases separate.
Please be sure to the keep the receipts for your personal purchases, too – just to prove to IRS that you aren’t including your personal groceries or supplies. Just drop them in a box or envelope somewhere handy.
Incidentally, IRS has issued some standard numbers you’re allowed to use as your food costs.
https://www.irs.gov/newsroom/article/0,,id=107656,00.html But I am almost certain your real costs will be higher. So they’re worth tracking.
You’ll be able to write off your home’s expenses – like rent or mortgage and property taxes, your utilities, your maintenance and cleaning costs, the way other businesses do – only differently.
https://www.irs.gov/pub/irs-pdf/f8829.pdf
For daycare businesses, you track the hours used for business, instead of the area.
And be sure to put your assistants on payroll. They are not freelancers.
You’ll find more information, some tips on paying taxes and a lead to an excellent book here:
https://taxmama.wpengine.com/AskTaxMama/252/care.html Good luck with your new business.
And remember, you can find answers to all kinds of questions about home-based businesses, and all kinds of other tax issues, free. Where? Where else? At TaxMama.com
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- Ask TaxMama :: Where taxes are fun and answers are free
- TaxTwist.com :: Where TaxQuips will be moving & You can add your comments
- IRS Announcement :: Daycare standard costs you can use instead of actual
- IRS Form 8829 :: Office in Home
- TaxMama article :: Childcare Business
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