FAMILY DAY CARE INCOME AND EXPENSES
Constance A. Bettis
District Specialist, Communities, Families and Youth
University of Massachusetts Cooperative Extension
- what your sources of family day care income are.
- what your day care expenses are.
- how to keep track of your income and expenses.
You must pay taxes on your NET PROFIT. Net profit is what is left when you subtract all your expenses (tax deductions) from your income. A complete record of all the money you spend on your day care program can help you to show a lower profit. If you show a lower profit, you will pay less in taxes. You will see how all your receipts add up.
Your family day care income is all the money you get from these sources for providing family day care:
When you add up your expenses, it is easy to overlook some things. Because many of your expenses are for items normally found in a home, your expenses are divided into two categories: direct business expenses and indirect business expenses.
DIRECT BUSINESS EXPENSES are bills you have because you are caring for the day care children (not your own children). You will be able to deduct the full amount of these expenses when you figure your taxes.
INDIRECT BUSINESS EXPENSES are expenses, such as your rent and electricity, that are shared by your home and your business. You can deduct only a part of these expenses when you figure your taxes. Your tax preparer or family day care tax preparation books will help figure the deduction that you can take.
1. Just for practice, fill in a Monthly Record of Income and Expenses for Konnie's Kinder Kare. Notes on Konnie's income and expenses for Tuesday, November 21, and Wednesday, November 22, are given below:
Konnie spent $15.00 (Check #104) on disposable diapers for her day care children at Shop-A-Rama and $21.00 (Check #105) for day care groceries at Food Corner.
Konnie paid her electric bill for $42.00 (Check #106) to Massachusetts Electric. She received her Child Care and Adult Food Program reimbursement check ($174.00).
You may want to send away for the *Basic Guide to Family Day Care Record Keeping and Calendar Keeper*. The calendar gives providers an easy system for keeping records of income, expenses, and attendance. The guide lists tax deductions. It also explains how to keep track of business income and expenses. You can order it from Toys 'N Things Press, 450 North Syndicate, Suite 5, St. Paul, MN 55104 (1-800423-8309) .
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