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My tax consultant told me last year that I cannot claim my entire house in my t/s or it will red flag the IRS, but I use my ENTIRE home for daycare, excluding a very small laundry room. Even down to the closets there is stuff stored for daycare. We ended up doing 78% last year. Is there a certain allowment for this? Im kinda upset because I really do use all of my home for daycare everyday 5 days a week and would like to be able to claim it all if possible.....
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House expenses
There is a confusion of terms here. Family child care providers can claim that 100% of the space in their home is used for business if they are regularly using all the rooms in their home for their business. This is quite common. But this doesn't mean that providers then get to deduct 100% of their house expenses for their business. Providers must multiply their space percent by their time percent to equal their time-space percent. It's the time-space percent that is applied to all house expenses.
Now, if your tax preparer is saying that you shouldn't claim 100% (or 78%) as your space percent because this will cause an audit then he or she is dead wrong. Family child care is the only business that uses the time-space formula and it is very common to be using close to 100% of your space as part of this formula.
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