Tax Deductions for Daycare Business

In the daycare business, child care providers take good care of the children in the absence of their parents. People can start a daycare at home or can properly rent a house for this business. Like all other companies, the daycare industry also has few tax deductions provided by Internal Revenue Service (IRS). All daycare providers should be aware of all these tax deductions to record these expenses to show to the IRS if the need arises.

1.  Travel Expenses Deductions

All the travelling to and from the daycare to the supplies store or attending daycare workshops or seminars are included in the tax deduction. Travelling to the bank to record the daycare finances and the field trips also come under the tax deduction benefit.

2. Kids Supplies Deductions

Daycare providers use many supplies to keep the children engaged and happy. Daycare supplies include diapers, formula milk, feeders, wipes to the entertainment stuff like water toys, toys, swings, paper plates, paper towels, toilet paper, playground equipment, etc. All these things come within the tax deduction circle. To get the tax deducted on all the daycare supplies, you need to keep the receipts with you systematically to avoid any hustle at the time of paying the tax.

3. Daycare Employees Deduction

If you have more children enrolled in your daycare centre, it is hard for you to handle them. In such a scenario, you will hire few more employees to take care of the children. Therefore, you are exempted from the tax and can get it deducted by keeping a record of all the employee’s salary slips.

4. Marketing Deductions

If you advertise your daycare to attract more customers, you are liable for a tax deduction; you may use any medium for advertisement, from social media ads to billboards or posters. Advertisement exempts you from paying the tax.

5. Educational Expenses Deductions

You cannot hire a nonprofessional for taking care of the kids at a daycare centre. A person must have basic daycare skills to get this job. In addition to this, the world is progressing so fast, and new child care techniques are introduced worldwide. 

Suppose you attend any of the workshops or send any of your employees to attend the workshops or seminars related to your business. In that case, you can avail of the tax deduction benefit. All the travel and meal expenses (standard meal rates) in educating yourself or your employees for daycare are deductible. Field trip expenses are also deductible. 

6. Insurance charges Deductions

Daycare centres are getting insurance policies. If you have any insurance for your daycare business, do not forget to enter the details while filling the tax return receipts.

7. Electricity and Gas Consumption Deductions

Electricity and gas are vital components of any daycare centre. The electrical and gas appliances used for kids like light bulbs can also be deduced easily. Jot down the appliances that use electricity and gas to avoid any problem when filing tax returns.

8. Appliances and Furniture Deductions

If any furniture or appliance is particularly used for the kids, they can be written off as tax deductions. It includes a microwave oven, television, refrigerator, electric oven, washing machine, clothes dryer, etc. If any appliance or furniture is also personally used, you can get 50% of the tax deducted. For further details about the usage of the appliances and furniture, visit the official website of IRS.

9. Daycare Maintenance Deductions

If your daycare needs any repairing or maintenance that is mandatory to keep the children safe, then you can avail of the tax deduction benefit on it as well. The major repairs include fixing the broken floor, roof or leaking ceiling, etc.

10. Office Expenses Deductions

Every business is directly linked with office tools. Along with taking care of the chidden, you need to keep track of all the account details and record the business. This requires the office supplies like a computer, printer, scanner, photocopier, desk, and other stationery supplies. All these products are deductible.

11. Social Security Check Deductions

Every business requires a security system to stay on the safe side; a Daycare business requires monitoring cameras 24/7 and any security guard or automated security system to keep the children safe. Any expenses to maintain the security system is also deductible. Just do not forget to keep the proper record of all the supplies.

12. Telephone Deductions

If you have a specific telephone assigned for attending and making calls for childcare business purposes, you can avail of the tax deduction provided by the IRS. You have to prove that the telephone is not used for your personal use and is only dedicated to the daycare business.

13. Bank Charges Deductions

If the daycare provider has a bank account for your daycare business use to accept the payment from your clients, you can apply for the tax deduction. All the monthly or yearly amount deducted by the bank as their service charge is also deductible.

Childcare providers can avail of all the above-mentioned tax deductions by writing them off the tax receipts. IRS does not approve any of the tax deductions without concrete proof of daycare receipts, child care expenses, the actual cost of supplies and other related business expenses. So, make sure to keep a record of everything from the very first day of your daycare business. You should keep the receipt of even a small supply purchased for the daycare business. Every receipt, transaction details, and other required documents should be properly arranged, so if ever IRS knocks at your door, you do not have to panic about proving yourself. 

What daycare expenses are tax deductible?

All the expenses of the daycare business are tax-deductible, from childcare supplies to advertising expenses.