ARE YOU READY TO MEET THE TAX MAN?

It's that time of year again! Are you prepared?

Before you set up that appointment, you need to be sure that you have accounted for all of your allowable expenses and have documentation to prove your claims. Here is a list of common items that can be deducted from your business income. In order for the expense to be fully deducted, it needs to be used 100% for your daycare business and you must have a receipt, canceled check, or some other means to prove you spent the money.

Arts and crafts supplies
Baby wipes
Bank charges related to your separate daycare checking account
Bookkeeping, income tax, legal services provided for your business
Books for the daycare children
Books for you concerning child care issues or the operation of your
business
Daycare insurance
First aid supplies
Gifts for the daycare children (limited to $25.00 per child per year for
1998)
Long distance phone calls related to your business.
Paper towels used for your daycare
Postage used to mail out your handbook to a new family
Second phone line used exclusively for business

In addition to these 100% deductible expenses, there are other expenses related to the operation of your home which qualify as business deductions.

Since your business is operated out of your home, the IRS requires you to fill out Form 8829 which allows you to claim certain expenses associated with the operation of your home as a business expense. This is a great help to those of us trying to reduce our taxes!

The following expenses may apply to your situation. If so, you will need to use your space/time formula to determine the exact percent of these expenses which can be used to reduce your taxes.

Cleaning supplies used to clean Mixed Use areas of your home
Cost of furnace repairs and cleaning
Electric bill
Garbage removal/recycling fees
Home insurance
Home heating
Mortgage interest
Property tax
Rent

There are several other valid business expenses that I am sure you incur in the process of operating your daycare. These are only a few examples which I hope will help you reduce your taxes!

Brigitte A. Thompson (WAHM of Sarah 1/93 and Jacob 4/97)

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About the Author:
All articles ©Copyright 1999 Brigitte A. Thompson Brigitte is the President of DATAMASTER, LLC and has been providing accounting, bookkeeping, income tax and payroll services since 1992. She has also operated a home daycare for years and has written a book for providers :
The Home Daycare Complete Record-keeping System