posted on September 21, 2001 01:07:35 PM new
HI all -
I have daycare for my daughter to cover when I work my part-time job out of the house. Today I paid for an additional 3 hours to cover for me when I went to a booksale to buy books for resale.
Are those 3 hours of daycare a deductible business expense?
If you use daycare of some sort in order to conduct your home business, is that deductible?
I could look this up, but wondered what others do.
posted on September 21, 2001 08:02:32 PM new
Day care is NOT a business expense. There is no way that I can even imagine that it is remotely a business expense.
Or, maybe your baby is an employee, and the day care center is the baby's office?
posted on September 21, 2001 08:54:08 PM new
Day care could be considered a business expense if you were a business that provided it for your employees (including yourself). You would be better off from a tax credit standpoint.
posted on September 21, 2001 09:43:56 PM new
Hmmm. I'll have to look that one up. I don't believe I've heard of any employer offering that as a benefit. Generally, when you're giving an unusual benefit to your employees you have to be very careful how you do it, or it could be considered as a way of hiding payroll to avoid payroll tax. The IRS is unforgiving when it thinks this is going on. If anyone wants to set that up for their own business, my only advice would be to have their CPA help them.
posted on September 22, 2001 12:18:49 AM new
No, unfortunately child care isn't a business expense (I used it for years when my son was young enough to need it, and I've always had my own business). However, the child care tax credit is a nice chunk of change, especially if you are in a low to moderate income bracket. It begins to phase out at about $100,000 a year gross income.
posted on September 22, 2001 07:55:19 AM new
>I don't believe I've heard of any employer offering that as a benefit.
That is wrong, all of the major auto makers provide this at a benefit, however, most times it is not "free". But it sure isn't anywhere near what a person would pay for that type of daycare. The employer is subsidizing the cost by probably only charging for the labor, food, and materials.
Was the daycare center a licensed center? If so you may be able to apply for the child care credit (or whatever it is called).
Personally, I wouldn't take that three hours as a expense or credit because it will greatly increase the chance of an audit.
"In pioneer days they used oxenfor heavy pulling, and when one ox couldn't budge a log, they didn't try to grow a larger ox. We shouldn't be trying for bigger computers, but for more systems of computers." - Grace Hopper
[ edited by mikeselis on Sep 22, 2001 07:56 AM ]
posted on September 22, 2001 09:13:00 AM new
MIKESELIS: Taking the child care credit doesn't increase your chances of an audit one bit. Millions of families in this country take it every year, with no problem.
BTW, that credit applies for any member of your family for whom you must provide support, if you also need to hire daily care. This might be a parent with Alzheimer's who lives with you, or a handicapped spouse.
posted on September 22, 2001 11:13:04 AM new
Thousands of businesses offer child day care as a fully paid benefit at company owned centers or supplement day care at private centers.
It is a business expence just as any other employee benefit is.
However, the business must follow strict rules for defined benefits to qualify for an expence.
posted on September 22, 2001 01:54:23 PM new
To follow up, I forgot that, as a family, we are already taking child care expenses into consideration on our taxes. I tend to forget that from a tax standpoint I am not just a single person hanging out there, a lot of it is folded into our family tax return. My husband is self-employed so we already were paying estimated taxes, for example, and now that I have a business we just pay more each quarter towards what I will owe.
