Question For Tom On How to File

[GrannyJ]

I have a large daycare. My daughter and I are both on the license. In the past I filed my taxes on Schedule C. But this year my daughter worked with me.
My daughter works part time with me and part time at a center. Is there anyway that we can file taxes so we both get deductions from the home daycare?

[TomCopeland]

partners

I have a large daycare. My daughter and I are both on the license. In the past I filed my taxes on Schedule C. But this year my daughter worked with me.
My daughter works part time with me and part time at a center. Is there anyway that we can file taxes so we both get deductions from the home daycare?

This is a complicated question. The only way you can both claim business deductions is if you operate two separate businesses. Highly unlikely you can do this out of one home. There are two ways to set this up: The first way is for the owner of the home where the child care is done to be the employer of the other. The second way is for you not to treat this as a business relationship. Instead, treat it as a personal relationship. Your daughter volunteers to help you out and is not paid. You occasionally give her gifts of money because you are her mother and you love her.

If you did it the first way, you would have to deal with payroll taxes and she would have to report the money earned as income. In the second way she doesn't report any income, you don't file any payroll taxes and you can't deduct what you paid her.

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