Three Myths About Family Child Care Deductions

"You can deduct a specific amount per load of laundry."

"You can deduct all trips taken in your car if you post an advertising sign in your car window."

"You must save your child care records for seven years."

All three statements are false.

They are the most common child care myths I continue to hear about at workshops and via email.

Laundry

There is no specific amount you can deduct per load of laundry and there is no set amount of laundry loads you can claim as business deductions. You can deduct your Time-Space percentage of laundry detergent, bleach, etc. associated with washing and drying items used for your business. You can also deduct the cost of using a Laundromat. In addition, you can deduct the Time-Space percentage of the cost of the washer and dryer.

Car Sign

You can only deduct car expenses when you take trips in which the primary purpose of the trip is for your business. Simply having a car window sign advertising your business does not make a trip a business trip. If you take a trip to the grocery store and buy business and personal food, you could deduct the trip if you buy more business food than personal food. However, having a sign in your car window does not affect your ability to count this as a business trip.

If you do drive around your neighborhood just to show off your car sign and try to attract parents to your program, this would be a business trip. But, it's unlikely that you would be doing this very often. You can deduct the cost of the sign!

Seven Years

There is no IRS rule that says you must save your business records for seven years. IRS rules do say to save your records for at least three years after filing your taxes. You want to also save records of any items you are depreciating for as long as you are depreciating them, plus three years. Some states require you to save your records for four years. In that case, save all tax records for four years.

Summary

Don't be misled by these myths. If you hear something that sounds a little strange, ask the person you hear it from, "Where does it say that?" You want to see something in writing from the IRS before you accept what you are told. You won't find anything about laundry loads, car signs or seven years.

Tom Copeland - www.tomcopelandblog.com

Image credit: https://www.cnn.com/2021/09/20/cnn-underscored/how-to-do-laundry/index.html