2015 Tax Changes Affecting Family Child Care Providers

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The year 2015 saw a number of tax changes that affect family child care providers.

* Providers may deduct in one year (rather than depreciating) items they purchased in 2015 that cost less than $2,500. Providers must include a written statement with their tax return indicating they are electing this rule. See my article.

* The standard meal allowance rate for 2014 is: $1.31 breakfast, $2.47 lunch/supper and $.73 snack. Use this rates for all meals and snacks served in 2015 (including meals and snacks not reimbursed by the Food Program). You may deduct up to one breakfast, one lunch, one supper and three snacks per day, per child. See my article.

* The standard mileage rate for 2015 is $.575 per business mile. The rate for 2016 is $.54 per business mile. See my article.

* The 50% bonus depreciation rule has been extended to 2015. It was originally set to expire at the end of 2014, but was extended by Congressional action in December 2015. This rule allows providers who purchased new furniture, appliances, playground equipment and office equipment to deduct half of the normal depreciation in 2015. See my article.

* The income limits to qualify for the IRS Saver’s Credit has increased to $60,000 (adjusted gross income) for couples filing jointly and $30,000 for individuals or married people filing separately. See my article.

* The IRS has relaxed the rules defining what is a repair (deduct in one year) vs. a home improvement (depreciate over 39 years). Repairs can now include replacing a few windows, installing a wood or tile floor and replacing roof shingles. See my article.

* Under certain circumstances providers may be able to deduct fences/patios/driveways and home improvements in one year, rather than having to depreciate them. See my article.

If you use a tax professional make sure she or he understands these changes.

To learn more about these new rules, visit my website at www.tomcopelandblog.com or see my 2015 Family Child Care Tax Workbook and Organizer, published by Redleaf Press, which will be available January 8, 2016.

2015 Tax Workbook

Tom Copeland – www.tomcopelandblog.com

Image credit: https://www.flickr.com/photos/119903731@N02/


Categories: Deductions, Depreciation and Home, Record Keeping & Taxes

6 replies

  1. When you claim meals do u have to save receipts for food?

    • If you use the standard meal allowance rate to claim food expenses, you don’t need to save any food receipts. Do keep daily records of all the meals and snacks you served each day to each child.

  2. According to the Minnesota Dept of Human Services, effective 2/1/15 in home day care providers must use the new simplified self employment procedure for reporting income on taxes. If I am reading this correctly, you do not get to itemize any expenses- it is just a straight 50 % of income is taxable. Is that correct? Do you have to use the simplified self employment procedure?

  3. Hi Tom-I run a home based family daycare. My 26 yr old daughter still lives at home and in 2015 I licensed her as my substitute/assistant. I pay her $300 cash on a weekly basis. Do I claim this amount as a loss?? Is she supposed to file seperately?? I have no idea!!! Help please!!

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