Home Daycare Tax Information
When you open a home daycare, it is important to consider the tax implications of the business. You are required by law to pay your taxes each year, and to pay your taxes quarterly after the first year you are in business. In addition to traditional taxes, you will also need to pay a self-employment tax, which is the amount your employer would pay for you into the Medicare system. You should set aside 25 percent of your income each month to pay taxes, so you have the money at the end of the year.
Other People Are Reading
-
Deductions
-
As a home daycare provider, you can deduct many expenses that you accrue while operating your daycare. Keep receipts of any supplies you buy for your daycare, including toys, art supplies, diapers, wipes and food that you provide. You can also deduct advertising costs and may qualify for a home-office deduction, depending on your circumstances and home. Keep a copy of all of your receipts to use when you file your taxes at the end of the year.
Filing Taxes
-
The first year you are open for business, you may want to visit an accountant to help you do your taxes and to help you figure out how much you should pay each quarter to the IRS. It may be easier to continue to use an accountant each year. If you do not want to pay for an accountant, you can file your taxes on your own. Small-business tax software can make filing your taxes easier.
-
Paying Taxes Quarterly
-
As a self-employed individual, you will need to pay your taxes quarterly to the IRS. The IRS website has a calculator to help you determine how much you owe each quarter. You can adjust the amount to your actual earnings for the quarter or pay the estimated amount based on last year's taxes. Taxes are due on April 15, June 15, September 15 and January 18. The dates may vary slightly each year depending on where the day falls in the calendar. You can mail the payment in or pay online.
Child Care Tax Credit
-
As a childcare provider, you will need to issue a statement to each family telling them the amount they paid you for childcare each year. On that form, you will need to include your Social Security number or your Employer Identification number, which you can get through the IRS. It takes two weeks to receive the number, and the statements must be issued by the end of January. Families can deduct childcare expenses from their taxes. Parents may also need this information if they have signed up for a flexible spending account at work to help pay for childcare.
-
References
Resources
- Photo Credit A young woman holding a pen, doing her taxes image by Christopher Meder from Fotolia.com
