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I started babysitting mid February of 2010 and then started my licensed in home daycare June of 2010. I've made quite a bit of money on the tuition that I charge per child and I have been on the Food Program since I became licensed (so I get reimbursed for food). But I have not set aside ANY money for tax purposes. Although I have spent ALOT starting up my daycare for supplies, food when I wasn't on food program, toys, etc. I have saved all receipts for any purchases that were made for daycare from February and on. So I guess my question is do you think I need to worry.... am I going to owe a bunch of money for taxes?
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You are probably fine. I would set up a spreadsheet, enter all of your expenses and then subtract it from your income to see where you stand now. If you owe at the end of the year, you can set up a payment plan with the IRS and then simply play estimated quarterly taxes next year, which will be estimated based on your income after expenses this year. But, really, you'll probably end up not owing. Don't worry
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You are probably fine. There are really good deductions for business use of your home that are far more generous for home daycare providers than for any other home business, plus the majority of your startup costs are going to be fully deductible, as well. Definitely start your tax planning now, though, in case you do need to play "catch up" for the remainder of the year.Comment
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Are there any good books or websites that go into great detail about write offs, deductions, etc that anyone is aware off? I would really like a complete list for myself as to what we really can write off. Maybe we could start another thread, and everyone can list ideas so we dont miss anything?
I dont have anything put aside either, and I still need to find out if I need to pay quarterly or annually.Comment
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I learned my lesson quick about daycare and taxes my first year I didnt deduct all I could being new at it and owed 2,000 to feds and 800 to state after that I did my home work. You can deduct your utlities such as water, electric, natural gas, your house phone, your cable if you use the tv, any toys you buy, food, clothes you buy for use in daycare, supplies you buy, any field trips you take plus gas mileage anytime you use your vechile, the years after that I have showed a loss and have gotten a refund of anywhere from 6,000 to 9,000 dollars I also have 3 kids and my husband works too.Comment
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Originally posted by legomom922 View Post
Tom Copeland has many books that pertain specifically to daycare tax law. he is also very supportive of providers and assisted me with an IRS audit personally, for free. He's a member on this forum...and now that his name has been mentioned, I'm sure we'll hear from him soon
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Estimated taxes
If you are married the money withheld from your spouse's salary will help cover any taxes you may owe. September 15 is the deadline to file the third quarter of estimated taxes for 2010, so if you aren't sure whether or not you will owe taxes, send in some money using Form 1040ES Estimated Taxes. In general, you will owe about 20% in federal taxes on your gross income.
My book Family Child Care Record Keeping Guide identifies over 1,000 allowable business deductions (end of shameless plug).Comment
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Tom, I have no problem with you plugging your books. Many here would be greatly helped by them. You can link to your book/s directly if you like.Originally posted by TomCopeland View PostComment
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RedleafPress has some good books...
We used his books on "Record Keeping" and "Contracts and Policies" in a Family Child Care Administation class at my CC (1 credit class) and it talked about how keeping your recipts for not only the food and toys you buy but even your household/utility bills and car expenses (with daycare related business trips to get more food or materials or running to the bank) and keeping track of "time/space" ratio of daycare related tasks (such as preparing before you open, cleaning after you close, and doing any internet research for curriculum) in your house can help you get tax deductions.Originally posted by Crystal View Postwww.redleafpress.org
Tom Copeland has many books that pertain specifically to daycare tax law. he is also very supportive of providers and assisted me with an IRS audit personally, for free. He's a member on this forum...and now that his name has been mentioned, I'm sure we'll hear from him soon
Don't forget to keep track of ANY money your program gets (even the food program checks) and to track when the parents pay you and how much, even get FCC recipts and have them sign it so that you have proof if they said they paid a bill but you know they didn't. This way you can give them their DC tax infromation sheet at the end of the year you can have it ready. It also wouldn't hurt to have 2 bank accounts- one from your profit and one the taxes that you take out; estimate about 15-20% (before deductions applied) of what you made the first time and after a while you can see what your average flow is and by tax time if after all the number crunching you paid too much you know to lower it a bit and just divide what your net income (after taxes) was and what your gross income (before taxes) was and that would be the average precentage to work with when taking expenses into consideration- but it will go up when you get an assistant because you have to pay taxes for every employee on your payroll.
Also as soon as you can, Hire an ACCOUNTANT! It can save you alot of time and headache if you aren't good with tax laws and big numbers (I know I'm not).Comment
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Unregistered above is me. I thought I was signed in, I don't know why it posted as unregistered. It shows my name up above. Anyway, it's me.Comment
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