Category Archives: Types of Deductions

Mileage Deductions

For 2013 you get 56.5¢ for each business mile (keep your logs daily) .  While employees can’t deduct driving to work, look at visits to clients, extra meetings, errands or shopping for supplies. Business owners – especially child care providers – have the same and more.

Landlords need to log trips to the property, buying supplies, driving for maintenance, etc.  Keep a record of all business mileage – and personal mileage!  Costs for parking and/or tolls can be claimed in addition to the mileage deductions.

2014 Tax and Recordkeeping Workshop 01112014 FinalBe sure to attend my 2014 seminar on Tax and Recordkeeping.

Saturday, January 11, 2014
1:00 p.m. – 4:00 p.m.
YMCA CRS Mission Valley
3333 Camino del Rio South Suite 400
San Diego, CA  92108

For more information, call 1-800-481-2151

Download CRS Signup Form HERE. Also visit YMCA Childcare Resource Service at http://crs.ymca.org

Source: Tax News & Tips, Year End 2013

Exceptions to the In-Home Exclusive Use Rule

You may be able to deduct the business expenses for that part of your home even if you use the same space for non-business purposes.

To qualify for this exception to the exclusive use rule, you must meet both of the following requirements.  Continue reading →

Ten Things The IRS Needs To Know About Your Child or Dependent Care.

Small CCP teaching childrenIF YOU WANT TO GET CREDIT FOR CHILD and DEPENDENT CARE, THE IRS NEEDS TO KNOW…  

IRS Tax Tip 2011-46,  Last Reviewed or Updated: 04-Sep-2013  

If you paid someone to care for your child, spouse, or dependent last year, you may be able to claim the Child and Dependent Care Credit on your federal income tax return. Continue reading →

Audit Alert #2 – Letter from the IRS?

What to do when you get a letter from the IRS.

uh oh signYou’ve gotten a letter from the IRS.  Don’t panic.

Call your tax preparer, but a note of caution; you need someone who can represent you in front of the IRS.  You do not want to do this alone.  If you do not have an Enrolled Agent to work with – you want one. EAs are the only federally licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS.

I am an Enrolled Agent, and if you want someone local to you, you can locate an Enrolled Agent by contacting the National Association of Enrolled Agents, NAEA.  If you want to learn what is an Enrolled Agent and what distinguishes them from other tax preparers, please read Enrolled Agents . Continue reading →

Audit Alert #1 – Trip Wire – Mileage Logs

What is one of the most common trip wires to trigger an audit?

CAUTION Audit Alert SignWondering why you got a letter from the IRS?  Could it be your mileage log?  The IRS Is a stickler for details when  it comes to mileage logs.  Did you make sure that your mileage log reflected the day-to-day use and associated expenses for your vehicle(s)?

Whether you are a roadwarrior account manager for a company, or a child care professional – your vehicle log is one of the most important documents you have to maintain – CONSTANTLY.  Don’t think you can fudge it and not end up paying dearly.

Back in February 2010, a man named Mr. Royster¹ went before the IRS to defend his lack of documentation for his vehicle.  In particular, he didn’t have a day-to-day log of his mileage and associated expenses.  Mr. Royster tried to reconstruct his mileage for the previous 12 months, but the IRS determined his reconstruction failed to show the specifics.

Inadequate mileage logs can also create its own set of problems.  Think of it this way; you are giving the IRS a reason to dig deeper into your records.  That can end up costing you dearly and a loss of vehicle deductions.  Take the time to keep good records – it’s worth it in terms of dollars and cents — and peace of mind.

But back to Mr. Roster.  The IRS ended reviewing – and scruitinizing 3 years of his history.  He only had mileage logs for 2004 and 2005 that showed beginning and ending odometer readings for each day.  The court ruled that INADEQUATE.  Consequently, the court gave Mr. Royster ZERO vehicle deductions for 2004 and 2005!

If you have any doubts about your mileage log, feel free to download our free templates.  One is from the Bradford Tax Institute and is a very good excel spreadsheet for calculations.  The other is a simple mileage log – so feel free to modify to your own personal need.

¹Bradford Tax Institute

Tracking and Counting Hours

What Hours Can You Count When You Are Away From Home?

We’ve written about keeping track of your hours (https://childcaretaxspecialists.com/track-your-hours-even-when-children-arent-present/) but what about the hours you spend on business activities away from your home such as shopping for toys, picking up and dropping off children (if you offer that) or even attending seminars and workshops? Continue reading →

Thinking of Selling Your Home? What About Taxes?

Will You Owe Taxes When You Sell Your Home?

In Tom Copeland’s recent blog – he talks about what a family child care provider faces in the decision to sell their home by way of taxes.  One tax you can probably avoid and another you cannot.  This will give you the high points, but it is always best to speak with your tax preparer to get the latest on potential tax impacts.

Let’s begin with the tax that you probably can avoid. Continue reading →

Are You Deducting All of Your Outdoor Expenses?

In Tom Copeland’s “Taking Care of Business”, he touches on what qualifies as outdoor deductions for child care provider businesses.  Bottom line?  Deduct all the expenses that are designated as “ordinary and necessary” to your business, especially if it is used 100% for your business.   But what about those expenses that are used for business and personal purposes?  They may be deductible, in part, so download our Time-Space Percentage Crib Sheet so you can keep track of those receipts!  Download Crib Sheet here.

Click to access Time-Space-Percentage-crib-sheet.pdf