Tax Write Offs For Your Childcare Business

by admin on January 16, 2009

A tax write off is a tax deduction. They are the expenses that are normally incurred in the operation of a business and therefore are deductible from the taxes you are supposed to pay to the IRS. By knowing your legitimate tax deductions can dramatically decrease your tax payment, leaving you more money for your income or business profit.

Tax write offs or tax deductions are available not only to large businesses or corporations but to home based business as well. Your childcare center, being a home-based business, is entitled to a lot of tax deductions. Having your childcare business in your home will free you from the expenses that normally go to rent payment and in addition, you can have a tax write off because of your use of your home space for your business. If you dedicate one half of your house for your childcare business, you will be entitled to a 50% write off of your rent or mortgage payments from your tax payments.

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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Tracy Whalen August 27, 2009 at 10:28 pm

Mileage and gas is: either, not both. Also the “dedicate use of a portion of the home” is misleading. You must use a time/use formula for calculating utilities along with other items. Also there is no mention of the fact that you must figure in the lose of a full mortgage interest deduction. Part of which must be included on schedule C against the income of the business first. This article is too vague for someone to depend on for legitimate advice.

Kelly December 20, 2010 at 5:27 pm

I had a CPA do my taxes for the year in which I opened my daycare. Once I saw the ‘typical write-offs’ list he had, I have done my taxes myself ever since. You could go to a tax professional like I did the first year.

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