I Am Completely Lost...

[Preschool/daycare teacher]

on all the taxes stuff. I just found out I'm supposed to count any money earned "babysitting" as self-employment income on my taxes:confused: I'm not licensed or anything. I only had one child this summer until she went back to school and I have one this fall (I'm trying to get 1-2 more, but so far no luck).
But I will have made more than $400 by the end of this year, so it sounds like it counts as self-employment. So now what do I do? I haven't been keeping track of how much I was making or how much I'm spending on providing care. I don't know what space/time share percentage is, or whatever it's called
How do I prove what I've spent? When I've gone to the store I just bought food for my husband and myself and I make meals for the child I have that day with the food I got for myself and my husband. But now it sounds like I need to somehow keep track of what I spend on food and supplies/toys. I don't have receipts for a lot of it since I bought things used from individuals selling stuff. And I heard something about keeping track of how many hours I worked and how many square feet of childcare areas the child uses. If they are in the whole apartment except our bedroom, would I count our entire apartment except for it (which would include the living room, bathroom, kitchen for meals, and playroom)?
I think I need a step by step instruction list... ugh, now what?

[Thriftylady]

First of all are you running legally? You can only deduct your expenses if you are running in accordance to the laws in your area. Secondly yes you have to count every penny of the income you make, but if you do it right you will be able to deduct a lot. The time space percentage is explained in detail by the IRS. Keep every receipt that you will be using for daycare. If it is a daycare only item, then you can deduct 100%. Things you will also use for something else falls into the time space deal. There is a standard deductions for daycare meals, so I haven't been keeping track of those receipts.

[MyAngels]

I'd suggest getting Tom Copeland's books on the subject. Best investment a provider can make IMHO. Plus, the cost is deductible (save the receipt) .

[Thriftylady]

I'd suggest getting Tom Copeland's books on the subject. Best investment a provider can make IMHO. Plus, the cost is deductible (save the receipt) .

I have actually thought of getting this but all I saw was for the 2014 taxes is the 2015 one out yet?

[MyAngels]

There are actually two books that I would recommend. One is the Family Child Care Record Keeping Guide. That's the book that outlines and explains all of the ins and outs of FCC taxes. This one changes every so often, the latest edition is the 9th edition I think.

The other book would either be the Tax Workbook and Organizer or the Tax Companion. The Workbook is the one to use if you do your own taxes and the Companion is the one to use if you have a preparer do your taxes. They are updated every year and the 2015 won't be available until early in 2016 because Tom incorporates all of the latest changes and updates to the tax laws each year.

HTH

[Thriftylady]

There are actually two books that I would recommend. One is the Family Child Care Record Keeping Guide. That's the book that outlines and explains all of the ins and outs of FCC taxes. This one changes every so often, the latest edition is the 9th edition I think.

The other book would either be the Tax Workbook and Organizer or the Tax Companion. The Workbook is the one to use if you do your own taxes and the Companion is the one to use if you have a preparer do your taxes. They are updated every year and the 2015 won't be available until early in 2016 because Tom incorporates all of the latest changes and updates to the tax laws each year.

HTH

The workbook and organizer is the one I am waiting for. I have never used anything like that for my taxes but would like to try it at least once.

[Preschool/daycare teacher]

Are things any different if you're just "babysitting" compared to running an actual daycare when it comes to record keeping and taxes and all? Of course I still have to report it, but is everything the same whether it's "babysitting" unlicensed, or providing licensed daycare?
Yes, I am operating legally. In my state I do not need to be licensed until I have up to six children. I am not going to be taking on more than 3-4 children, and some of them won't be here everyday, since some are part time.
One of the reasons I didn't want to be licensed was so I didn't have to go through this mess. But apparently I have to anyway
Can anyone give me any specifics on what I need to be keeping track of right now just for tax purposes? Like their attendance, meals they eat here, hours they are here, hours I am working on childcare related things...? etc.

I will have to find that book.

[Thriftylady]

As long as you are operating legally and doing the care in your home, you can deduct those things. Keep track of all the things you listed above, as well as things like toys, supplies, cleaning supplies, anything used for daycare purposes.

[Preschool/daycare teacher]

Okay, now I have another question Does the money we pay for rent count toward anything? If so, how does it work and how do I prove what we pay? The place we are renting is our residence, so it is not a childcare only thing.

Also, do I need to start paying for groceries separately, like paying for our groceries, and then letting them scan the groceries for the children and paying for it separate from ours so I will have a receipt? I'm not sure how I would break that up since it's only one child right now and I just make her meals with the groceries we already have.

[Thriftylady]

Rent goes into your time space percentage. As far as groceries, I think there is a standard deduction for them. Not sure let me see if I can look it up.

[Thriftylady]

These are 2014 numbers on this link. Keep in mind they will change for 2015. You can use this instead of actual expenses. It is what I plan to do. Makes it easier.

[Preschool/daycare teacher]

These are 2014 numbers on this link. Keep in mind they will change for 2015. You can use this instead of actual expenses. It is what I plan to do. Makes it easier.

Did you post a link? I don't see one.

[TomCopeland]

expenses

Okay, now I have another question Does the money we pay for rent count toward anything? If so, how does it work and how do I prove what we pay? The place we are renting is our residence, so it is not a childcare only thing.

Also, do I need to start paying for groceries separately, like paying for our groceries, and then letting them scan the groceries for the children and paying for it separate from ours so I will have a receipt? I'm not sure how I would break that up since it's only one child right now and I just make her meals with the groceries we already have.

Rent, renter's insurance, utilities and all other expenses associated with where you live are partly deductible as a business expense. Therefore, save receipts for everything you purchase. At the end of the year you will determine how much of these expenses you can deduct. You do not need to buy groceries separately. Use the standard meal allowance rate and you don't need to save any food receipts. Just keep a record of the number of meals and snacks you serve each day and then multiply them by a standard rate at the end of the year.

[Thriftylady]

Did you post a link? I don't see one.

Well I meant to sorry flakey today . Remember these numbers may change for the taxes for this year but you can see the basic idea.

http://www.irs.gov/publications/p587/ar02.html#en_US_2014_publink1000226306

[Sunchimes]

Several pieces of advice. 1) Right now, order Tom's Record Keeping Guide. It is the best money I ever spent when I was starting. He explains time/space, but the best part is that he lists hundreds, maybe thousands of things that you can deduct from your taxes. Things you would never in a million years think about.

2) While you wait for the book to arrive, go back through this forum and read everything. There is a wealth of information here just from people asking questions. Read this handout from Tom http://tomcopelandblog.com/wp-conten...w-Provider.pdf

http://tomcopelandblog.typepad.com/

http://tomcopelandblog.com/

3) In January, order the Tax Companion if you have someone else do your taxes or the Workbook if you do your own. Unless you have a very good tax person, they might try to argue about some deductions. These books shut that argument down. You can trust what Tom says about daycare taxes over what the generic tax software says.

4) Record keeping isn't hard and just takes a couple of minutes a day. First off, start keeping a daily record of what time kids leave and arrive. This can help you keep track of your meal deduction (was Amy here for pm snack or did she leave early that day?), and in case of an audit, you have proof.

I have a whole series of spreadsheets on my computer, and once a week, I sit down with the attendance page and mark off my meals and how many hours the kids were in attendance. Each night, I write on a calendar how much time I spent doing daycare related things after the kids went home. This includes cleaning, reading this forum, reading daycare related books (like Tom's), searching the web for activities, ordering supplies from amazon, talking to parents on the phone or texting, interviewing new families, working on your handbook, decorating for holidays, etc. This is for time/space.

Now, time/space. This is a formula the IRS concocted to figure out what percentage of toilet paper, Lysol, etc can be deducted. You can find the formula in this forum and in his books. Very basically, you need to know how many hours you had children in care that year and how many hours you spent after the kids went home. Then, you need to measure your apartment. If you have a patio where the kids play, that counts. Then, measure the rooms that aren't used for daycare. The kids may never go into your bedroom, but do you store spare toys in there? Are there unused pack n plays under the bed? Then that room counts. More on that in the books. That is your space. You do some mathematical things to those numbers and come up with your time space.

Tom's Calendar is set up to record all of those things in one convenient place. I love it! One thing I do on the expenses page is that if something is used both personally and for daycare, like paper towels, I put the total on the page. Later, you will deduct your t/s amount, which can, and does often go as high as 40% or more. Then, if something is used 100% for daycare, like wipes or a baby bottle or glue for an activity, I put an * beside it. Then, when I go to total them at the end of the month--ok, sometimes it's the end of the year---I can remember what to deduct. Always note on there what it was for, wipes, paper towels, glitter, Christmas craft, toy, etc.

It sounds complicated, but it's only hard the first month. After that, it's easy. Get Tom's books, at least the Record Keeping right now and the Tax Companion or Workbook later. I might also recommend the one called Inventory Keeper. Even your furniture can be depreciated!