I babysat this year making around $5,000.
I am doing my taxes on Turbo Tax online and it is allowing me to use deductions on everything claiming the IRS considers me as self employed). I am just tring to make sure this is correct.
Can I deduct things like lawn care for the playground, some electric, water and water services, food, toys, ect???
I did use my car alot too.
Any help would be great. I have searched the internet, but cannot find any usefull info.
I am not a licensed day care.
Thanks!
If your state or local jurisdiction requires licensing you may NOT deduct ANY expenses related to your daycare business.
Normally you may take a home office deduction for a home daycare business, without having to meet the exclusive use test. The deduction is based upon your reasonable estimate of the amount of floor space used for the daycare operations compared to the total floorspace of your home. Allowable expenses are proportional amounts of rent, mortgage interest, property taxes, utilities, repairs and maintenance, insurance, depreciation, etc. (Note that any depreciation allowed or allowable is subject to recapture and taxation when you sell your home — even if you qualify for the exclusion on the sale of a principal residence — so if you own your home you should run this past a local tax pro to set up the depreciation records and keep track of it until you sell.)
Other things such as food, diapers, toys for the exclusive use of your clients’ children and any miles driven that are directly related to the business are fair game as well.
Again, if licensing is required at the state or local level, you are NOT allowed to deduct ANY expenses if you are unlicensed. The reason for this is that business deductions are not allowed for an illegal enterprise and you are an illegal enterprise in the eyes of the IRS if you are operating an unlicensed daycare center where licensing is required.
If you have any friends that do taxes or works in that field ask them.
I used to do my own taxes but it’s become so impossible that I just
take mine to an expert. You are listing things like lawn care and playground, actually since you are not licensed I doubt that you can
deduct any of the things you have mentioned. Could be the food, but
you would need receipts. Good luck.
What you need to do is fill out a Sch C which lists your income and all expenses taken against same. Plus, you fill out a form 8829 which lets you break down and take a portion of all your home expenses on the business (Sch C) form you are filling out. I don’t personally have much use for turbotax as I spend too much time fixing and correcting probolems that are created by its use. It is okay for a simple 1040EZ but once you get beyond that ???
If you are not a licensed day care AND if a license is required, you are limited to what you can deduct. (Some areas don’t need a license for day care, some areas don’t need a license for under a certain amount of kids, you really need to check on this)
But if you are legal, things to consider deducting.
Food for the daycare kids (but not your own)
Toys (as above)
Time/space percentage for rent, utilities, (yes, lawn care for playground), any shared house expenses, insurance, etc.
Straight deduction for anything that is solely daycare.
To use the car, you need written records at least outlying the business vs the personal use of the car (and commuting, if that applies).
Again, if you are violating local laws (please check) in your area, it is also not allowed to deduct anything (but you still need to claim the income).