Calculate Your Own Time-Space Percentage

Calculating your Time-Space Percentage correctly will have the biggest impact on reducing your taxes.

Many family child care providers, and some tax preparers, fail to take advantage of this unique IRS rule and, as a result, pay too much in taxes. Your Time-Space Percentage is entered onto IRS Form 8829 Expenses for Business Use of Your Home.

The Time-Space Percentage is made up of a Time Percent and a Space Percent.

The Time Percent is based on the number of hours you use your home for business activities, including the hours children are present as well as the hours you conduct business activities when children are not present.

The Space Percent is based on the number of rooms you use either on a regular basis for your business or exclusively for your business.

We have a spreadsheet that you can use to calculate your Time-Space Percentage.

Here are the numbers you need to complete this spreadsheet:

• Total number of square feet in your home

• Number of square feet used exclusively for your business (if you have exclusive use rooms)

• Number of square feet used regularly for your business

• Number of hours you cared for children in your home

• Number of hours you did business activities in your home when children were not present

• If you were not in business for the full year, the number of hours there were in the year when you were in business.

Tom Copeland - www.tomcopelandblog.com

Image credit: https://www.flickr.com/photos/30478819@N08/49267269376

For a comprehensive discussion of the T/S% see my book Family Child Care Record-Keeping Guide.