Tax Deductions for Day Care Providers
Auto Travel:
Your auto expenses are based on the number of qualified business miles
you drive. Auto expenses for you as a day care provider could include
your transportation:
- to and from a class taken to enhance your day care skills;
-on field trips with those for whom you are providing care;
- for errands related to day care business (e.g. going to the bank to make a deposit of day care receipts);
-to the store to shop for day care supplies; or
-when chauffeuring day care attendees.
Capital Purchases:
Certain purchases for day care use may be so-called "capital items."
These items must be deducted on your tax return using different rules
than are used for supplies and expenses. Capital items are those that
normally last more than one year and cost more than $100 - typical
examples would be cribs, playground equipment etc. Be sure to keep
receipts for these items separate from receipts for general supplies.
Supplies and Expenses:
Generally, to be deductible, items must be ordinary and necessary to the
operation of your day care business. Record separately from other
supplies the costs of business assets that are expected to last longer
than one year and cost more than $100. Normally, the costs of such
assets are reported differently on your tax return than are other
recurring, everyday business expenses like small toys or books. Try to
get separate store receipts for the items you use for day care. For
example, if you buy food for the day care attendees, don't combine this
purchase with the food purchases for personal use.
Business Use of Home:
Normally, the expenses you incur (other than home mortgage interest,
taxes or casualty losses) related to your personal home are not
deductible. However, when you regularly use your home for licensed day
care, a portion of the cost of your home upkeep can be deductible - the
deductible amount depends on both the number of square feet you use for
day care AND the amount of time you routinely use various rooms of your
home in the day care business.
Your day care records don't need to detail the specific hours a room
in your home is used for business. It's enough to show that you
regularly use a room for day care. For instance, say your home has one
bedroom that is regularly used for afternoon naps for day care
recipients - about two hours each day. Your day care center is open from
7:00 a.m. to 6:00 p.m. Even though nap time uses only two of the 11
hours your center is open, the bedroom is considered used for business
for the entire 11-hour business day.
