• When you have a dependent child / children, your taxes can be lessened. A dependent is any person of minor age who is living with you for more than half of the year. In addition, a dependent is one whom you give a half of your expenses to provide his or her needs.

• Families who acquire a low annual income can acquire a credited tax amounting to two thousand dollars or more.

• The different expenses that you have incurred while simultaneously working and raising a child or looking for a work while raising a child can also reduce up to one thousand one hundred forty dollars of your income tax.

To be able to get these benefits, you should be able to have the following documents and identification cards:
- Receipts (either weekly or monthly)
- Canceled checks if present
- Statement from childcare provider
- Tax ID number or social security ID number

It is important that you have all these requirements in order for you to avail of the income tax deductions.

Nutrition and Childcare
To guarantee that a child is given enough nutrition that he needs each day, the federal government has come up with menu guidelines that daycare centers are usually required following. This is because half of the necessary nutrients that the child needs are provided to him by the daycare centers. The menu guideline classifies the needed food intake by age.

Ages 1 – 3
• 1 ounce of protein (cheese, or beans, and meat or eggs)
• ¼ cup of vegetables
• ¼ cup fruits or ½ cup of fruit juice
• 1 ½ cup of milk
• 2 slices of bread

Ages 4 – 6
• 1 ½ ounce meat and/or egg
• ½ cup of vegetables
• ½ cup of fruit
• 1 ½ cup of milk
• 2 slices of bread

Ages 7 and up
• 2 ounce meat and/or egg
• 1 cup of cooked beans and/or 3 ounce cheese
• ¾ cup of fruits
• ¾ cup of vegetables
• 1 ½ cup of milk
• 2 slices of bread

Daycare centers that strictly follow these menu guidelines are able to receive subsidies from the government provided that they present the needed paperwork.

Smoking, Drug Use, Alcohol and Childcare
It is very important that the parent is guaranteed that their child is in good hands when entering a daycare center. Therefore, certain actions are regulated. Inside the premises of the childcare center, smoking is usually prohibited. Some daycare centers allow people to smoke only outside the building. As provided in the state law, drug use is also prohibited. When an employee is under the influence of alcohol or drugs, he or she is not permitted to work. If this happens, that certain employee may very well be terminated. Before enrolling your child in daycare, make sure that the premises of the childcare center are far from a harmful environment.

For more info: How to start a childcare business

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There are a few factors that you need to know before calculating how much you can deduct and correctly use them in qualifying for a daycare tax exemption. Any facilities that you use in running your daycare are included in the computation and one of this is your house. However, in order to calculate this properly you need to figure out what portion you used for business and what is used for your personal living expenses. In this way, you can use a portion of the amount you paid in your general bills, such as electricity, water, telephone and other bills that may be employed in running your daycare. Just be reminded that only the amount used when running the daycare can be used to qualify for the daycare tax exemption.

Included also in the expenses that can be claimed for tax exemption are the food you have used in the meals of the children and to your employees too (if there are). In fact you can deduct 100% to your tax the expenses on meals of your employees. It may be easier to keep a standard rate for all the meals and snacks provided in your daycare. You can use up to three snacks a day, beverages and three meals, but you cannot include any non-food items used to prepare the meals. Of course this is only good for employees that food allowance is not yet included in their salary or wages. You have to have a complete and updated record on these for you to avail the tax exemption. Bear in mind that personal expenses in your personal food nor your family are not included in the computation.

Therefore, at the end, you will think running your daycare in your own house is not a bad idea after all. You will realize that you can also gain many benefits from running your daycare in the comforts of your home and this is by taking advantage of the tax deduction. In addition, with the careful calculation and a little extra work, you will be amazed because you can make the daycare tax deduction possibly work best for you.

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There are other important factors that you need to be aware of in order for you to be able to calculate how much you can correctly deduct and use when it comes to qualifying for a daycare tax exemption. Anything related to the facility, in this instance your house that you used to run the daycare could be included. However, in order to calculate this properly you need to figure out what portion you use for business and what is used for living expenses. In this way you can use a portion of the amount you pay on your general bills, such as electricity, that may be employed in running your daycare. Only the amount used when running the daycare can be used to qualify for the daycare tax exemption.

Also included in expenses that can be claimed are the food you feed the children or any or all of your employees with. In fact you can deduct 100% of the employees’ meals and use this as part of the calculation for the daycare tax deduction. Of course this is to say that their salary or wages don’t already have a food allowance included in them. There needs to be careful records in order to use these amounts for the daycare tax deduction. It may be easier to keep a standard rate for all meals and snacks provided as part of the daycare. You can use this up to three snacks a day, beverages and three meals, but you cannot include any non-food items used to prepare the meal.

In the end, running a daycare center at your own home isn’t at all bad. By taking advantage of the daycare tax deduction you actually gain far more benefits from running the daycare in your own residence. In addition, with careful calculations and a little extra work, you can make the daycare tax deduction work the best for you as it possibly can.

See: How to start a daycare business

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You therefore need to apply the time/space formula to the total amount spent on supplies within a year in order for you to find out how much you can deduct for these consumable The time/space formula calculates how much time you spent doing daycare in a year compared to the number of hours in a year, and also calculates the amount of space in your home that you use for your business.

You need to calculate the number of hours you spent doing child care in a year. Then you need to divide that number by the number of actual hours in a year (8760) to come up with a percentage of time you spent providing child care in the year. Finally, you need to calculate the percentage of your home that you use for your business and multiply this percentage times the percentage of hours worked to get a final percentage. This final percentage is then multiplied by the amount spent on consumables in a year to come up with the dollar figure of how much you can claim as a business expense on the consumables you purchased.

Here is a list of the most common consumables used, though you may come up with a lot of others depending on your situation:

Dish soap, laundry detergent, dryer sheets, all cleaning products, Ziploc bags, aluminum foil, Saran wrap, garbage bags, tissues, toilet paper, paper towels, baby wipes, hand soap, lotion, paper plates, paper cups, and air fresheners.

There are many other supplies and consumables that you probably use at home. You can come up with your own list, whatever would best reflect your current situation.

Other types and forms of deductions have something to do with supplies and services for your home that you pay for. This includes utilities, garbage services, internet service, and more. Since these services benefit both your business and your family, they once again need to have the time/space formula applied to them in order to calculate your deduction. Use the figure that you calculated from above and multiply it times the total amount paid in a year for, say, your electric bills to come up with a deductible amount. Basically, any supply or service that is used to benefit your business can be at least partially deducted.

Remember to include these items: electric bills, gas, water bills, home security system fees, cable or satellite television, internet service and garbage and/or recycling pickup. All of these services are necessary for running a child care business and are therefore deductible. Just calculate the total amount spent in a year for a service and then multiply it by your time/space formula calculation to get a total deduction. Just like what you did with the other deductibles mentioned above.

There are occasionally times when you can deduct 100% of the cost of a service. This applies when a service is used exclusively for your business. For example, if you have a phone line that is only used for your child care business, then you can deduct 100% of the fees for that phone line. Also, if your child care is run out of a separate building from your home, say a converted garage, then you can probably figure out the electricity for just that building and deduct that cost at 100%. It is, of course, advantageous to be able to increase your deductions, so take advantage of this if you can.

The tenth and final deduction that is commonly missed is a deduction for work done on or services provided for your home. For example, did you have new gutters installed? That cost will be at least partially deductible. Did you have your carpets cleaned? Again, that is a deduction. Did you have a repairman come to fix the refrigerator? Take a deduction for that! Save all receipts for any work done so you can claim the deduction. You will need to speak with your accountant about how much you can deduct for services done, because it depends on the service how the deduction is taken. Things like refrigerator repair will probably be deducted based on the time/space formula. Carpet cleaning and other cleaning services may be 100% deductible. Things like home improvements may have the time/space formula applied or they may be depreciated, depending on the cost. These can be great deductions, it is just a little more difficult to know how to calculate the total deduction on these items and should probably be done with the help of an accountant.

All the deductibles should be determined and calculated on a regular basis since failure to do so would definitely lower your chances of lessening and lowering the tax deductibles that you ought to pay. Besides, doing this is definitely your right and benefit as home owner and a small business owner altogether.

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By allocating a specific portion of your home to your childcare center entitles you to write off the expenses for that portion of the house. The portion of the house should be specifically for the use of your home based business only and not for anything else, otherwise you will lose your tax deduction for that portion of the house. You utilities consumption for the portion of the house dedicated to your childcare business is also eligible for tax deduction. They include water, electricity, gas, and telephone bills if they are all used in the operation of your home based business.

Upgrades or renovations done on the portion of the house dedicated to your home childcare business can be tax deductible also. When you put dividers, added carpets or linoleums, repainted the daycare area, added more lighting fixtures, installed air conditioners, and other upgrade works will add up to the amount that will be deductible from the taxes you will pay the government.

Food supplies that are consumed by the childcare center are also tax deductible. When shopping for food supplies, you have to separate the receipts of those items that go into the childcare center from the items that your family will be consuming.

Another item that is tax deductible is mileage and gas consumption related to the operation of your home based childcare center. When you have to drive your client children around, like in a field trip or trip to the museum, your mileage and gas consumption will be tax deductible. Trips to the grocery in order to purchase food supplies for the children and trips to the bank to deposit payments made by the parents will be included also in this category of tax write off.

There are a lot more of items that you can deduct from your tax payments. All you need to do is do a little research to learn which can be included in your tax write offs. A good option is to avail of the services of a tax professional who can advice you on what to include in your tax write offs.

See: How to start a childcare business

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