More Frequently Asked Questions

My husband helps to clean up the daycare area after hours and mows the lawn. Is there any way I can claim what he does on my business tax return?

Great question! This is one that I have encountered frequently. Running a daycare is challenging and we need all of the help from our family that we can get. It is wonderful when your teenager helps you out by preparing the craft project for the next day or your husband shovels the driveway so the daycare parents can get in. However,claiming what they do on your tax return is a sticky subject.

Assuming you are operating your business as a sole proprietor and completing a Schedule C tax form, the IRS considers the taxpayer whose name appears at the top of the Schedule C as the owner of this business. As the owner, you need to track the time you spend in any way related to the operation of your home daycare. Unfortunately, the time your family members contribute can not be counted in this part of the Time/Space formula.

You may want to consider paying your family members as real employees of your business. This is perfectly acceptable and can create a nice business tax deduction for your daycare. If you choose to do this, you will need to pay them wages, withhold taxes, and file payroll tax returns. Sounds like a lot, but if you are paying only one or two people, it is not very time consuming at all. Keep in mind that although this creates an expense for your daycare business, your employees will have to report the income they have earned on their own taxes.

The parents of a child in my care have just requested a Form W-10 from me. They say they need it for their taxes. What is this form? Where can I get one?

Form W-10 is a Dependant Care Provider's Identification and Certification form. It is used as an informational form only and is not sent to the IRS. They daycare provider's name, address, and taxpayer identification number is listed on the form. Parent's should have this information in case they qualify to claim the Child Care tax credit and they may need to substantiate child care flexible spending plans sponsored by their employers. The form can be obtained at no charge by calling the IRS at 1-800-829-3676.

Brigitte A. Thompson, President (WAHM of Sarah 1/93 and Jacob 4/97) DATAMASTER, LLC~

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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