How Do You Go From $65000 Profit to $15000?????

[sahm1225]

Yes please explain how it's beneficial to pay your husband a few hours an week to do stuff for the daycare


And I have tons of deductions. Mortgage interest, daycare insurance, taxes, home repairs, food, toys, percentage of utility bills. I still have a profit but mine is probably similar to your BFF. I keep all receipts and I spend a lot on daycare.

Couldn't you just ask her to tell you her expenses?

[Unregistered]

The major one that gets me is that she has 2 teenagers of her own and she deducts the max she can for each of them as employees. They don't have to claim taxes on it, they are14 and 15. She doesn't actually pay them any money, she says it is all done in clothing, cell phones, dance classes etc. So over $10000 a year is payments(suposedly) to her kids...

[Blackcat31]

Who cares what you BFF is or isn't claiming? Seems to me that it really isn't any of anyone else's business.

If she is claiiming things illegally then she will eventually get caught and pay the price. Even if she never does get caught, she is the one who has to live with the fact that she lies on her taxes.

I would simply make sure that my taxes are done properly and as honestly as possible.

I know lots of people who falsify things on their taxes. Some due to ignorance and others due to simply not caring and being willing to risk it.

In the end, everyone is only responisble for themselves.

[TomCopeland]

Hiring Husband

Tom, can I ask a question about paying a family member? My husband is my unofficial helper- he's home 2 days of the week and is helping me care for the kids, as well as doing some of the cleaning (dishes, vaccum, ect). I am license exempt and do not have a large daycare (1-3 kids a day). Can you explain if claiming him as a paid employee would be beneficial, and why? Thanks so much!!!

In general, it doesn't make sense to pay your husband to help you with your business. If you do, you must withhold Social Security/Medicare taxes and he must report the amount as income and pay income taxes. In addition, in some states you may be required to purchase workers compensation insurance on him. There is also a lot of forms to file for all of this.

The only situation where hiring your husband has a tax benefit, is if you set up a Section 105 medical reimbursement plan. When you do this you can deduct, as a business expense, medical expenses for your family that are not otherwise covered by insurance. This includes medical insurance premiums, drugs, eyeglasses, copays, etc. You need to have a professional set up this plan. I've written about this in my article "When Hiring Your Husband Makes Sense" :http://www.tomcopelandblog.com/2011/...kes-sense.html