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FAMILY DAY CARE INCOME AND EXPENSES

Constance A. Bettis
District Specialist, Communities, Families and Youth
University of Massachusetts Cooperative Extension

Copyright/Access Information


YOU WILL LEARN:

- what your sources of family day care income are.

- what your day care expenses are.

- how to keep track of your income and expenses.


WHY YOU HAVE 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.


FAMILY DAY CARE INCOME

Your family day care income is all the money you get from these sources for providing family day care:


FAMILY DAY CARE EXPENSES

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.


POSSIBLE DEDUCTIONS


ACTIVITIES TO DO

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:


TUESDAY, NOVEMBER 21

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.


WEDNESDAY, NOVEMBER 22

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).


RESOURCES TO EXPLORE

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) .


DOCUMENT USE/COPYRIGHT
National Network for Child Care - NNCC. Part of CYFERNET, the National Extension Service Children, Youth and Family Educational Research Network. Permission is granted to reproduce these materials in whole or in part for educational purposes only (not for profit beyond the cost of reproduction) provided that the author and Network receive acknowledgment and this notice is included:

Reprinted with permission from the National Network for Child Care - NNCC. Bettis, C.A. (1991). *Family day care income and expenses* (Family Day Care Facts series). Amherst, MA: University of Massachusetts.

Any additions or changes to these materials must be preapproved by the author .
FORMAT AVAILABLE:: Available only on the Internet
DOCUMENT REVIEW:: Level 2 - Cooperative Extension Systems: Universities of
Massachusetts, Rhode Island and Connecticut
ENTRY DATE:: July 1995

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