Tax Deductions for Daycare Business

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In 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, daycare industry also have few tax deductions provided by Internal Revenue Service (IRS). All day care providers should be aware of all these tax deductions to record all these expenses to show to IRS if the need arises.

1.  Travel Expenses

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 keep a record of the daycare finances and the field trips also come under the tax deduction benefit.

2. Kids Supplies

Day care provider use many supplies to keep the children engaged and happy. Day care supplies include the basics like diapers, formula milk, feeders, wipes to the entertainment stuff like water toys, stuff toys, swings, paper plates, paper towels, toilet paper,  and 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 in a systematic way to avoid any hustle at the time of paying tax.

3. A Daycare Team

If you have more children enrolled in your day care center, 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. Advertisement

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

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

Suppose you are attending any of the workshops or sending any of your employees to attend the workshops or seminars related to your business. In that case, you can avail 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

Daycare centers 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

Electricity and gas are the vital components of any daycare center. 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

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. Maintenance

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 repairing includes fixing the broken floor, roof or leaking ceiling, etc.

10. Office Expenses

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 stationary supplies. All these products are deductible.

11. Social Security Check

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

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

If 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 day care receipts, child care expenses, actual cost of supplies and other related business expenses. So, make sure to keep a record of all the things 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. 

People Also Ask

What daycare expenses are tax deductible?

All the expenses of day care business are tax deductible from childcare supplies to advertising expenses.