IRS Tax Forms/Tax Changes

Irs logoHere are the most common IRS tax forms/tax changes to help you prepare your tax return.

Form 1040 Schedule C Profit or Loss from Business – Use this form to report your income and your business expenses. The expenses from Form 8829 and Form 4562 are transferred to this form.

Form 1040 ES Estimated Tax for Individuals – Use these quarterly forms to pay estimated taxes on April 18. 2011, June 15, 2011, September 15, 2011, and January 16, 2012.

Form 1040 Schedule SE Self-Employment Tax – Use this form to calculate your social security/medicare taxes on the profit of your Schedule C. Transfer this tax amount to your Form 1040.

Form 1040 X Amended U.S. Individual Tax Return – Use this form to amend your tax return up to three years after filing your original return.

Form 3115 Application for Change in Accounting Method – Use this form to recapture any depreciation you were entitled to claim from earlier years but didn’t claim. There is no limit for how far back you can go to recapture this depreciation. My book Family Child Care Tax Workbook and Organizer has a chapter explaining how to fill out this form.

Form 4562 Depreciation and Amortization – Use this form to claim depreciation on office equipment (computers, printers, etc.), furniture, appliances, fence, patio, and home improvements

Form 8829 Expenses for Business Use of Your Home – Use this form to calculate your Time-Space percentage and claim house expenses: property tax, mortgage interest, house repairs, utilities, house insurance, and house depreciation. The 2010 version was released by the IRS on February 7, 2010.

Instructions for Form 8829 Expenses for Business Use of Your Home – This form contains an explanation of how to report your time-space percentage on Form 8829 when you have an exclusive use room. See page 2.

Form 8962 Application for Voluntary Classification Settlement Program – Use this form to avoid being audited for incorrectly treating your assistants as independent contractors. For details on this program, see my article.

Form SS-4 Application for Employer Identification Number – Use this form to get your EIN to protect yourself against identity theft. Give parents your EIN rather than your Social Security number. You can get your EIN online at www.irs.gov.

Form W-10 Dependent Care Provider’s Identification and Certification – Use this form to give parents your identification number. You can write the amount the parent paid you on the top of the form and use it as an end-of-year receipt. Get the parent to sign a copy and keep for your records.

IRS Publication 583 Starting a Business and Keeping Records – This publication outlines what records to keep to claim them as business expenses.

IRS Publication 587 Business Use of Your Home – This publication explains how to calculate your time-space percentage and claim food expenses.

Here are the significant tax changes affecting family child care providers:

2016 Tax Changes

2015 Tax Changes

2014 Tax Changes

2013 Tax Changes

2012 Tax Changes

2011 Tax Changes

2010 Tax Changes

Here is a list of the IRS standard meal allowance rates for 2008-current year.

Image credit: www.irs.gov

38 replies

  1. Hello,
    I am wondering the best way to go about claiming i pay someone. I pay someone 200-250 a week to help me cook, clean, etc.. Can I pay him as an individual contractor and fill out a 1099 for him and he pays his own taxes?
    Thank you
    Angela Killary

    • If the person is not helping you care for children, then you can treat them as an independent contractor. If you pay
      more than $600 you must issue Form 1099 and he would pay his own taxes. If the person is helping you care for children the time spent helping children would need to be treated as an employee (meaning you would have to pay payroll taxes).

  2. Thought-provoking writing . I learned a lot from the details . Does anyone know if my business would be able to get a fillable 2010 IRS 1040-X example to work with ?

  3. If I have an EIN can I pay myself/owners draw as if I’m a employee and give myself a w-2?

    • Assuming you are self employed, you can’t pay yourself as an employee or file a W-2. Instead, you can take money out of your account any time you want. You don’t need an EIN to do this. Any money to take for yourself is not a deduction.

  4. I was licensed the end of April 2015. This will be my first time filing as a provider. Do I need a TIN or EIN to give to parents?

  5. I need a W-2 form for my employee–where can I find one that I can print off from?

  6. I gave my employee a 1099 form is this right or did I do it wrong I live in mass. If this is wrong and why and how should I be doing taxes for her? My tax person told me to do the 1099. Also How do IO send you my taxes to you to check them I just joined and paid the 15

  7. I am opening my own in home childcare in August and I am going to pay my sister to help me on a daily basis. How do I set up my company to do so? An LLC is taxed higher than an Sub chap S Corp. But I don’t know much about this tax stuff. What structure do I choose to open my business? Thank you!

  8. I just started my home child care business and was told it would be fine to take 10 percent of my pay out each week to put in a separate account in order to pay taxes at the end of the year, 15 percent to be safe. Is this a good way to pay my taxes or is there another way I can do it? Specifically, what would be a more efficient and stress- free way to go about this process?

    • You need to be paying in at least 90% of the taxes your family owes each quarter. If you are married your husband can withhold more from his paycheck to cover any taxes you will owe. Or, you can file a quarterly Form 1040ES and pay your taxes quarterly. A rough rule of thumb is that you will owe 20% tax on your gross income, but this percentage can vary. 10% is too low.

  9. Hi – I made more money this year unexpectedly!! So great, but now I am worried about my healthcare rate going up and more taxes. On the other hand I took very little depreciation on my home. I used the purchase price from 20 years ago, but I have a current appraisal from this year that is much higher. So my question is: can I change my home value to get a bigger depreciation deduction and thus lower my net income from the schedule C. I don’t really want to change the depreciation from prior years. Would I have to?

    • More money is good. You can’t change your home value to get a higher depreciation deduction. You must use the original purchase price. If you haven’t depreciated items you owned before you went into business, and still have them, you can use Form 3115 to recapture any previously unclaimed depreciation.

  10. Do I really need a receipts to prove my income and for all other expenses?

    • If you are audited you will need to prove that the amount your reported as income is correct and that you didn’t earn other money that you didn’t report. So, a signed receipt from a parent is a good record to have. Other records such as notations showing payments and bank deposits are also helpful. You need an “adequate record” to prove you spent money for your business. Such records can include receipts, cancelled checks, credit/debit card statements, calendar notations, written records, photographs, etc. A receipt is the best type of record.

  11. Hello Tom,

    Do we use the 2015 book for our 2016 taxes? The 2016 book doesn’t come out until March of 2017 so I’m a little confused.

    Thanks!

    Tiffany

  12. When do providers need to give the W-10 form to parents? Do they follow the same rule as employers (Jan. 31st)?

  13. Hi Tom,

    Thanks for your books. They have helped me greatly every year.

    Now that my husband and I are 65 our standard deduction is greater than what our itemized deductions
    would be. Since I have always filed a schedule A in previous years I am wondering if I am required to
    file one. The reason this concerns me is that as usual I am filling out Form 8829 and deducting the
    time/space percentages of my mortgage interest and real estate taxes. Back in the nineties I was
    audited and the IRS did check the Schedule A and Form 8829 to make sure these figures were
    right.

    Thanks!

    Connie

    • You do not have to file Schedule A. Since the standard deduction is better for you, you shouldn’t file Schedule A. You will continue to claim your time-space% of your property tax and mortgage interest on Form 8829.

  14. Newbie here. I started my home daycare in 2014, but did not educate myself as well as I obviously should have. I have 2014 with two months of daycare income, 2015 as a full year, and I am currently doing 2016. I’ve learned a lot from your publications…a lot of mistakes…so I will be amending the first two years. My problem right now is with 2016. Employees. Most of my prior work history has been firefighting/EMS and as an office mgr for different construction companies. Both of which, you have plenty of workers as 1099 Independent Contractors. You can imagine my mistake already and it appears many, MANY home providers are ignorant on this. What what can I do now..here in 2017…about my “sudden employees”? I had two workers. one made approx $800 and the other (my live in adult child to complicate the equation more) made about $5000. So what do i do now? i will get my EIN #, create w2’s, see if I need to purchase workman comp/ unemployment insurance, and can calculate my portion of their gross income to pay SSI/medicare. (is this the correct path to rectifying the problem and satisfying my legal obligations?). But what about their withholding and everything else I am probably not thinking about. my son did have days where he didnt work as a caregiver…am i able in the future to separate his labor? I’m sitting here with a headache and quite the conundrum as to what to do. I would like to avoid an audit…as most people would. But i feel like I have placed a target on my return and would like to do as much damage control as possible BEFORE the notice of audit. LOL . Thank you so much for all your publications and taking very unseemly direct interest of your career to work with us.APPLAUSE APPLAUSE!

    • Yes, many family child care providers fail to treat their helpers as employees!Start treating your people as employees in 2017 by doing Social Security/Medicare withholding, paying federal and state unemployment taxes and finding out if you need to purchase workers compensation insurance.

  15. Can I have a partner in a in home childcare? She teaches mornings and I teach afternoon and we are both self employed? We are opening an in home preschool in the sate of Nevada. We will be licensed for 6 kids. It will take place in my home my friend and I want to partner I teach morning classes she teaches afternoon classes. How does this work for taxes? Are we both self employed we can both write off exactly what our expensive were ( if we split all the start up costs tables chairs ect)? We will have a separate account where we both will take our part out from what the parents pay. Any advice would be great

    • Yes, you can have a partner in your child care business. To form a partnership, you must file paperwork with your state secretary of state’s office. You must have a partnership agreement and flow all income and expenses through a partnership checking account. You will lose the ability to deduct some of your house expenses. See my article on partnerships:http://tomcopelandblog.com/should-you-form-a-family-child-care-partnership
      As a partnership neither of you would be self employed. You can’t split income and expenses and operate as two separate businesses. In my opinion, you would be better off hiring her as your employee. This would entail less paperwork and you would get higher business deductions. If you do this you can still cooperate and share decision making about how to run your program. You can call me with more questions at 651-280-5991. I don’t charge anything for answering questions.

  16. Hi Tom,
    Do you have resources that can help my wife to start her own home day care? We just wnat to make sure that everything is done right and according to law. The resource we are looking for are; how start home day care, what is deducted and not, for example can you deduct both your principal and interest or only interest, can you depreciate assets you purchased before going into business? Lastly, do you seminars for starters?

    Thank you

  17. Thank you Tom. We just ordered one of your book last week. Also, do you know any accountants you would recommend when it comes to tax season in MN? Well trained accountants for Home Day Cares?

  18. How will the new GOP reform affect us daycare provider’s?
    Will we still be allowed to deduct our expenses and only pay taxes based on your net income ?

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