What items are tax exempt in a daycare?

Question

If I provide childcare for my neighbors, what items in my home that I use to care for children are considered to be tax exempt items?

Answer 1

Nothing would be "tax exempt". However most everything that you use that has a direct relationship to the "daycare" activity would be deductible from your income on a Schedule C. You may, with some restrictions, have a loss that will offset other income. You really should consult a tax professional ASAP and get some guidance as to what would be deductible and the records necessary to support those deductions.

Answer 2

The items won't be tax-exempt, but pretty much any item bought because of caring for the kids would be deductible from your childcare income.

Answer 3

Tax exempt usually means you don't pay sales tax on the item. In that sense, nothing will be tax exempt. If you mean tax deductible, nearly anything used by or directly for the children can be deducted on your schedule C. Costs of keeping records of your income and expenses can also be deducted.

Answer 4

IRS' position is pretty much if it costs you a dime to make a dollar, it's deductible. Toys, books, learning supplies, food for children, sleeping mats, blankets. the cost to launder those items, the pro-rated portion of the area used for day care, office supplies, mileage to go shopping, the bank, other errands, etc. Keep track of mileage, keep all receipts. Also, if you haven't already, obtain a federal ID number (go to irs.gov and download SS-4). This number is necessary for your clients to receive a tax credit on their tax return. It is also a very good idea to keep track of the payments made by the clients so at year-end you can tell them that they paid $XXXX.00 for tax purposes. They will really appreciate that little extra. Good luck!!

Answer 5

Everything and anything you pay for to operate. A portion of mortgage, rent energy bill.

You do also have to claim every dime they give you for services.