The Home Daycare Provider's 1099 Tax Guide

You are the only business allowed to deduct a room your family also uses.

Every other home business must prove a space is used exclusively for work. A stylist at the dining table gets nothing. A photographer whose spare room is also a guest room gets nothing. A licensed daycare provider is the exception: your living room is a playroom by day and a living room by night, and you may deduct part of it anyway. No other trade can say that, and most providers do not know they can.

What you'll learn

• The rule that exists for you alone — and why licensing is a condition of it, not just a regulation
• The time-space percentage, step by step — not one percentage but two, multiplied - the worked example runs 65% of the house for 33.7% of the year, or 21.9% applied to $28,000 of household costs
• What the percentage applies to — and the direct costs you deduct in full instead
• Depreciation and the sale — why declining to claim it may not protect you
• Standard meal rates — breakfast, lunch, dinner and up to three snacks per child per day at fixed amounts, with no grocery receipts at all. Six children, five days a week, fifty weeks: $10,005
• Food Program money — income for children in care, not income for your own, and never netted against the meal deduction
• Toys, furniture and the sofa — shared items at the percentage, daycare-only items in full
• Your helper — why a person working set hours in your home is probably an employee
• Filing — Form 8829, the meal count, and the payroll deadlines that come first

Who this guide is for

• Licensed home daycare and family childcare providers
• Anyone feeding children from their own kitchen
• Providers receiving Food Program payments
• Anyone who has never run the time-space calculation properly

Who it is not for

If you work at a childcare centre and receive a W-2, this is not for you. If you are a nanny in someone else's home, you are generally that family's household employee, and it is not for you either.

Why this one is different

A tape measure and a tick-sheet are worth more to you than any other two objects in the house. The meal rates change annually, and the book says so rather than pretending otherwise.

Use it as an educational companion throughout the year, then bring your organized records and specific questions to a qualified tax professional when your situation calls for personalized advice.

Read on this subject

Free articles on the questions this guide covers, each one checked against IRS sources.

• The simplified home office option is reduced twice for a daycare. Then it is tiny. 300 square feet, then multiplied by your hours fraction. Worked against actual expenses, it is not close.
• The hours you count are not the hours the children are there One sentence in Publication 587 decides the numerator. The same home, worked three ways.