Write Offs

[Unregistered]

I shut down my daycare March of last year due to COVID. I haven’t reopened yet and haven’t decided when I will. For my expenses do I only use the receipts/expenses during the time I was open or from the whole year?

[Michael]

Welcome to the forum. I suggest you register to benefit from all of our options. Here is a list of threads related to deductions that will be of help: https://www.daycare.com/forum/showthread.php?t=56549

[TomCopeland]

COVID deductions

I shut down my daycare March of last year due to COVID. I haven’t reopened yet and haven’t decided when I will. For my expenses do I only use the receipts/expenses during the time I was open or from the whole year?

Count your expenses for the months you were open. Calculate your time-space% based on the months you were open.

[Unregistered]

What about expenses like property taxes, homeowners insurance, annual association dues, plumbing bills where some of these were billed and paid after March?

[TomCopeland]

Deductions

What about expenses like property taxes, homeowners insurance, annual association dues, plumbing bills where some of these were billed and paid after March?

Don't claim these expenses after March. You claim expenses in the month you paid them.

[Unregistered]

So would I pro-rate any of these such as the association dues (for Jan and feb) since what we pay is for the whole year?

[Unregistered]

Also what about my time log I kept through the summer with trainings, writing a COVID plan, webinars etc. I was still doing these things because I hadn’t decided to close yet and still not sure what I’ll end up doing. Should I count any of that time in my time/space?

[TomCopeland]

Deductions

So would I pro-rate any of these such as the association dues (for Jan and feb) since what we pay is for the whole year?

Claim 100% of this expense since you paid for it while you were open.

[TomCopeland]

time-space %

Also what about my time log I kept through the summer with trainings, writing a COVID plan, webinars etc. I was still doing these things because I hadn’t decided to close yet and still not sure what I’ll end up doing. Should I count any of that time in my time/space?

If you count this time then you would calculate your time-space% based on 12 months. If you do this, it will lower your time-space%, but you could then multiply it by 12 months of house expenses. I wouldn't do this. Instead, only count hours for the months you were open. This will result in a higher time-space% that you would apply to the months you were open.

[Unregistered]

How do Covid Relief grants apply to this?

I am located in michigan and face the same issue. My enrolled families at the time were all teachers so even after daycare were allowed to reopen in July, non of my families were scheduled to come back until Aug. I am also very high risk medically so I was unable to open for essential workers. Michigan started offering the Childcare Relief fund grants that we could apply for even if our location was closed. My contract/agreement with the daycare families is that they pay every week during the school year and I do not charge them from the last day they work until they go back but hold their spot however during the lockdown (with the understanding that we would have the ability to apply for the grants) I did not continue to charge them for the remaining 13wks. ($7,200 loss of income). We didn't find out until the end of Aug that schools would not be returning and that July and all future grants would require the center to be reopened. At that point, I knew I was never going to be able to open again.

I was able to use the April, May and June grants to pay three months of my mortgage which is in forbearance and get my utilities caught up. Nothing was left after paying that and I could not apply for the others due to not actively providing care.

Now I am having the problem of trying to figure out how this works for taxes because I only had children in my care up to March 17 and have been "closed by the state" until July and then closed due to covid issues since. I didn't officially give up on reopening until Aug but I'm not sure how to figure my time space percentage for expenses when there was no children in my care. Also, if a grant was used for mortgage and utilities (which was an approved used) how does that work when you can only claim your time space percentage of them for expenses???? Being a compromised daycare provider during covid has been one hit after another!

[TomCopeland]

time-space %

I am located in michigan and face the same issue. My enrolled families at the time were all teachers so even after daycare were allowed to reopen in July, non of my families were scheduled to come back until Aug. I am also very high risk medically so I was unable to open for essential workers. Michigan started offering the Childcare Relief fund grants that we could apply for even if our location was closed. My contract/agreement with the daycare families is that they pay every week during the school year and I do not charge them from the last day they work until they go back but hold their spot however during the lockdown (with the understanding that we would have the ability to apply for the grants) I did not continue to charge them for the remaining 13wks. ($7,200 loss of income). We didn't find out until the end of Aug that schools would not be returning and that July and all future grants would require the center to be reopened. At that point, I knew I was never going to be able to open again.

I was able to use the April, May and June grants to pay three months of my mortgage which is in forbearance and get my utilities caught up. Nothing was left after paying that and I could not apply for the others due to not actively providing care.

Now I am having the problem of trying to figure out how this works for taxes because I only had children in my care up to March 17 and have been "closed by the state" until July and then closed due to covid issues since. I didn't officially give up on reopening until Aug but I'm not sure how to figure my time space percentage for expenses when there was no children in my care. Also, if a grant was used for mortgage and utilities (which was an approved used) how does that work when you can only claim your time space percentage of them for expenses???? Being a compromised daycare provider during covid has been one hit after another!

Calculate your time-space% for the days up until March 17th. In other words, add up the hours you worked from January to March 17th. Then divide by the total number of hours during that period. Multiply by your space percentage for that time. Use your time-space% for house expenses for that period. Report the grants as income. You can still claim house expenses with grant money for that period.