How to File Taxes As a Daycare Provider
Filing taxes as a daycare provider means you are filing taxes as a self-employed sole proprietor. Filing as a daycare provider is just like filing any other taxes; the only difference is that you'll have to fill out a few extra forms. These additional forms will allow you to report your self-employment wages, pay self-employment taxes and claim business-related deductions as long as they pertain to the operation of your daycare.
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Instructions
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Go to the IRS website and download the 1040 tax form. Click to print the form.
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Download Form 8829 titled "Expenses for Business Use of Your Home". Click to print the form.
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Download the Schedule A form titled "Itemized Deductions". Click to print the form.
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Download the Schedule C form titled "Profit or Loss From Business". Click to print the form.
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Download the Schedule SE form titled "Self-Employment Tax". Click to print the form.
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Fill out Form 1040. Start from the beginning and work your way through it. When you get to line number 12, stop and fill out Schedule C.
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Fill out Schedule C. This form will determine whether your daycare is operating at a profit or at a loss. On this form, you must report any payments you've received from operating your daycare. You can also deduct any expenses you've incurred as a result of being self-employed. Some examples include: daycare advertising, insurance, mortgage or leasing expenses, utilities, maintenance, taxes, toys, playground equipment, and office expenses. When you get to line 30, stop and fill out Form 8829.
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Fill out Form 8829. This form will determine the business expenses associated with the use of your home. The form is divided into four parts. The first part will determine the percentage of your home used for daycare. The second part will figure out your allowable deductions associated with the daycare. The third part will calculate the allowable depreciation of your home. The fourth part will determine any carryover of any expenses not allowed into the next year. When you're finished with the form, go back to working on Schedule C.
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Enter the figure you calculated on line 35 from Form 8829 into line 30 on Schedule C. Finish the form and then go back to working on Form 1040.
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Report the profit or loss from line 31 of Schedule C onto line 12 of Form 1040. Continue working on the form. When you get to line 27, stop and fill out Schedule SE.
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Fill out Schedule SE. This form will determine your self-employment tax. You are required to fill out this form as long as your daycare made $400 or more for the year. Use the chart provided on the form to determine if you qualify for completing the short version or the long version. After completing the form, go back to working on the 1040 form.
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Enter the amount of self-employment tax calculated from Schedule SE on line 27. Continue working on the form. When you get to line 40a, stop and work on Schedule A.
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Fill out Schedule A. This form will determine your itemized deductions for your daycare. Line 28 will ask you for other miscellaneous deductions. Under this category, you can deduct any non-reimbursed work-related expenses you've incurred as a result of your daycare. Some examples include: mileage, uniforms, diapers, wipes, food, art supplies, books, liability insurance, licensing, bonding, rent, utilities, property taxes, maintenance and asset depreciation. When finished with this form, go back to working on Form 1040.
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Enter the figure you calculated for your itemized deductions in Schedule A into line 40a on Form 1040. Complete the rest of the form and sign and date the bottom.
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Review all 5 forms and make sure they are filled out entirely. Fill in any fields you may have missed.
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Mail your taxes to the IRS. The mailing address will vary depending on where you live. You can find the mailing address for your area on the IRS website under "Where to file tax returns" by clicking on your state.
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Tips & Warnings
Providing false statements to the IRS is a crime and punishable by law.
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