Questions and Answers from Tom Copeland’s Tax Webinar – Part IV

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“Should I count my unfinished basement in the square foot calculation of my Time-Space %?

“What is the best way to keep track of time spent doing
daycare when children are not present?”

“Can I count the hours I prepare my own taxes?”

These are of some of the questions and answers from my February 12th webinar “Tax Changes for 2012: How to Avoid Mistakes on Your Tax Return.”

The webinar was sponsored by daycare.com and hosted by the National Association for Family Child Care (NAFCC).

I conduct monthly webinars for NAFCC.

This is Part IV of a selected list of some of the questions from the webinar. Here is Part I, Part II, Part III, and Part V .

Time-Space %

“Should I count my unfinished basement in the square foot calculation of my Time-Space %?

Yes. You can count your basement as regularly used for your business if you have a laundry room, storage areas that are used for your business.

“Should I count an unattached storage building as part of the square footage of my home?”

No. If you do, you will have to pay taxes on any profit associated with the sale of the storage building when you sell your home.

“Can I count the hours for my Time-Space % if I am away from my home but someone else is in my home cleaning?”

Yes. What matters is if your home is being used for business purposes, not who is doing the business work. If the person is cleaning business and personal areas, only count part of the time.

“Can I use the Time-Space % if I rent my home?”

Yes. Use this for your rent, renter’s insurance, utilities, as well as your furniture, appliances, and household items.

“What is the best way to keep track of time spent doing daycare when children are not present?”

Track at least two months of records on a calendar. Each day indicate what time of day you did these activities (so we can see that it’s not during day care hours) and what you did (cleaning, activity preparation, meal preparation, parent phone calls, time on the Internet, etc.). Use the average
number of hours per week for the entire year. Do this each year. See my article for more information on how to do this.

“Can I count time shoveling snow or painting the outside of my home?”

You can only count time spent on activities that you would not otherwise do, except for the fact that you are doing child care. Shoveling snow at 5:30am I would count because you wouldn’t be doing this at 5:30am if you weren’t in business. I would not count mowing the lawn or painting the outside of your home because you would do these activities even if you weren’t in business. You can deduct the cost of the lawn mower and painting supplies or the cost of hiring someone to paint your home. Use your Time-Space % of the cost.

“If I used a room exclusively for my business can I count all of the time I clean it?”

Yes. See my article on how to claim an exclusive use room.

“Can I count the time I spent shopping for daycare food or supplies while away from my home?”

No. You can’t count time if you are away from your home because you are not wearing out or using your home.

“Is pest control costs subject to the Time-Space %?”

Yes, unless the pests only affect your daycare children. Not likely!

“When I wash bedding, etc. can I count the whole time it takes to do the laundry?”

Only if you stand in front of the washer and dryer and watch! Count the time to remove the bedding from the beds, carry them to the laundry room, put them in the washing machine, take them out of the washing machine and putting them in the dryer, taking them out of the dryer, and putting them back on the bed or storing them.

“Can I count the hours I prepare my own taxes?”

Yes, for your business tax forms (Form 8829, Form 4562, Schedule C, Schedule SE, Form 3115). No, for your personal tax forms (Form 1040, Schedule A, etc.).

“Is it a ‘red flag’ if my Time-Space % is larger because I offer 1st and 2nd shift child care six times a week?”

No. Keep good records and count all the hours you are caring for children.

“I spent a lot of time last year preparing my home for daycare, but I didn’t open until December. Should I count these hours?”

Probably not. If you counted these hours you would have to divide them by the number of hours in the year from when you started preparing. Unless your average weekly preparation hours were larger than your average weekly hours after you started your business, your Time-Space % will be lower.

“Do I count a covered porch that is used exclusively for my daycare?”

Yes, this can be counted as an exclusive use room.

“Should I start counting the time when I leave to pick up children from school in the morning or the time they arrive at my home?”

Only count time when you are in your home. So, start counting when the children arrive, not when you leave to pick them up.

“Can I count the time I’m away from my home on field trips with the children?”

If you leave on a field trip in the middle of the day and return later in the day, don’t subtract these hours from the time you use your home for your business. If you leave your home at 4pm and take children on a field trip and drop off the children at their home, stop counting hours at 4pm.

Check out the other Q&A:

Part I

Part II

Part III

Part V 

Tom Copeland – www.tomcopelandblog.com

Image credit: www.colourbox.com

Record Keeping smallFor more information on how to calculate your Time-Space Percentage, see my book Family Child Care Record Keeping Guide.



Categories: Record Keeping & Taxes, Time-Space Percentage

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