Family Child Care Tax Questions

Do I need to pay quarterly estimated income tax?

That depends upon many factors such as how much your spouse withholds at his place of employment. Each individual situation is very different and I'd suggest you ask your accountant if you should and if so, how much. The deadlines for quarterly payments are April 15, June 15, September 15, and January 15. Here is a great article (below) to help you with this.

Make Estimated Tax Payments

Do I need to be worried about paying Capital Gains taxes if I should sell my home?

Selling Your Home

How long do I need to keep my daycare records?

3 years after you file your taxes.

I received payment on January 2, 2013 for the last week of December. Do I claim that on 2012 or 2013 taxes?

2013. You always claim it in the year you RECEIVE it.

Can I hire my own kids to help me?

Yes from a tax standpoint, however check with your particular licensing regulations to see if this is permitted and if so, what rules may need to be followed such as fingerprinting, etc. Read more here:

To Hire a Relative or Not?

Do I have to give my Social Security Number to parents? Is it a law that we have to mail the parents their end of year tax report?

Actually providers are NOT legally obligated to provide parents with their Social Security Number. It is also not a provider's obligation to provide parents with a W-10 Form though it is good practice to do so. Read more here:

What to Give to Parents: Social Security Number or EIN?

Is the sales tax we pay on daycare supplies or food supposed to be included when we tally up for our deductions?

Yes.

From Tom Copeland regarding the exact question "If clients pay me money or gift certificates as a holiday or birthday gift, is it reportable income?"

His exact response:

Thanks for your email. Any money received by parents (or gift certificates) should be reported as income, even if it is called a present or a bonus. If the parent gives you an item as a gift (flowers, book, etc.) this is not income. If you spend the money on a business item you can deduct it. Tom

How much can I spend on gifts?

There is no limit on a gift amount per child, however you would categorize gifts you purchase for the children as Activity Expenses. On the flip side, gifts you purchase for the parents of the children in your care are limited to $25 per person.

Should I get an EIN Number?

Yes, it's a good idea. You can call the IRS 800-829-4933 for one or you can easily apply for one online free of charge.

Online EIN Application

How do you figure the Time Space Percentage?

You take the square footage of your home that you use for business and divide it by the total square footage of your home. (This can include your garage if you use it for daycare storage) Then, you take the total number of hours you are in operation for the year and divide it by the total # of hours in a year (8760). Once you figure these out, you take the space square footage number and multiply it by the time number. That will give you the %.

Space x time = %

How to Calculate the Time-Space Percentage for your Home Child Care Business




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