Another Question About Being Unlicensed And Taxes

[LindaMJ]

In my state, you have to be registered to care for 3 or more children. Currently I am not registered, but am preparing for that to happen. I was registered in 2010 until Sept 30 and then let my regis. lapse as I was looking for a full time job outside of the home, however, I have been reconsidering this. Anyways, I have given all of my daycare parents End of Year Receipts and intend on reporting all my income. On the 6 days of the month that I care for 3 or 4 children (which means I'm in violation of state law), I don't plan on claiming business expenses and house/utility, etc. expenses. On the other days of the month when I do have only 1 or 2 children, I do plan on claiming business expenses and house/utility, etc. expenses, based on my T/S. Am I correct about this? It is also my understanding I can claim food expenses whether I'm in violation or not. Is this also correct?

(I do have all parents sign their children in & out every single day, which if the state shows up, they will have proof that I am in violation some days, but I keep this record so I know what to charge parents and also so I know who was here for each meal/snack.) Thank you much.

[Michael]

Welcome to the forum Linda!

[TomCopeland]

Unlicensed care

It sounds like you were registered up until September 30th. From then to the end of the year you were out of compliance for 6 days each month. Correct me if I'm wrong in this.

If the above is true, then you can deduct all the regular house expenses up until September 30th. Can you claim house expenses after Sept 30 for the days you were in compliance and not count them for the 6 days a month you weren't? I've never had this question come up in 29 years and there is nothing in the IRS regulations that address this. I would do as you suggest, which is to only claim house expenses for those days you were in compliance after Sept 30th.

Regardless, you are entitled to claim food expenses and all other non-house expenses for the entire year - food, toys, supplies, depreciation on furniture and appliances, mileage, etc.

[LindaMJ]

Yes, you understood me correctly. Thanks so much for your help, I can now proceed with my tax work with relief.

[Gellybean6903]

Non-house related??

You mentioned that she can still claim non-house expenses for the entire year - food, toys, supplies, depreciation on furniture and appliances, mileage, etc.

I'm wondering what else is on the list of non-house expenses. I just ordered the 8th edition of your book...but I'm wondering what else is considered non-house.

Specially, flowers outside to enhance appearance of house/business?

Security system? It's in the house...but used to protect the business.

And if we build a sidewalk or walkway to keep the grass from getting destroyed by parents dropping off and picking up to rear door?? It's not apart of the house...

So many gray areas. Any and All help appreciated!!!

JB

[TomCopeland]

Expenses

You mentioned that she can still claim non-house expenses for the entire year - food, toys, supplies, depreciation on furniture and appliances, mileage, etc.

I'm wondering what else is on the list of non-house expenses. I just ordered the 8th edition of your book...but I'm wondering what else is considered non-house.

Specially, flowers outside to enhance appearance of house/business?

Security system? It's in the house...but used to protect the business.

And if we build a sidewalk or walkway to keep the grass from getting destroyed by parents dropping off and picking up to rear door?? It's not apart of the house...

So many gray areas. Any and All help appreciated!!!

JB

House expenses are: property tax, mortgage interest, house insurance, house repairs/maintenance, utilities, and house depreciation. I would consider a security system as a house expense and call it repairs/maintenance. Everything else is a non-house expense.

[Gellybean6903]

Follow up

So if we were to pour a sidewalk or put down some gravel/pavers in the yard...what would you file this under??

[TomCopeland]

Sidewalk

So if we were to pour a sidewalk or put down some gravel/pavers in the yard...what would you file this under??

All of this is considered a land improvement and must be depreciated over 15 years. However, you can use the 50% bonus depreciation rule for this in either 2012 or 2013. Claim this on Form 4562. See my article about the 50% bonus rule:http://www.tomcopelandblog.com/2013/...k-in-2013.html