Checklist for IRS Schedule C: Profit or Loss From Business
Before signing your tax forms and sending them to the IRS, use this checklist to spot potential errors on IRS Form Schedule C Profit or Loss From Business.
[] If you have an EIN, enter this number at the top of the form, rather than your Social Security number. Do the same on your IRS Form Schedule SE Self-Employment Tax.
[] Line 1: Put your parent payments and subsidy payments here.
[]Line 4: You don't have any cost of goods sold, so don't enter any amount here.
[]Line 6: Enter your Food Program reimbursements here. Don't include any reimbursements you got for your own children.
[] Line 9: If you made car payments during the year, enter the business portion of your car loan interest here, even if you used the standard mileage rate.
[] Line 13: If you bought something for more than $2,500 and are depreciating it on IRS Form 4562 Depreciation, the amount from that form gets transferred onto this line.
[] Line 16b: Claim the business portion of credit card interest for business purchases.
[]Line 24b: Do not enter the cost of any food served to your daycare children on this line. Instead, claim food deduction on line 27a.
[] Line 26: If you hired someone to care for the children in your care, even if only for a day, did you file the proper payroll forms for this person? Almost anyone you pay to work in your business is an employee. If you enter any amount on line 26, the IRS will probably check to see if you filed the proper payroll tax forms.
[]Line 30: Warning! When entering a number on this line you can choose between transferring the expenses from your IRS Form 8829 Expenses for Business Use of Your Home or claiming house expenses using the Simplified Method (Safe Harbor Rule). The Instructions to Schedule C tell you how to calculate your house expenses using the Simplified Method. Because of the Daycare Facility Worksheet on page C-11 of the instructions, it is extremely unlikely that you will be better off using the Simplified Method. Therefore, ignore this method and be sure your expenses from Form 8829 show up on this line.
[]Line 31: Enter your profit or loss from this line onto your IRS Form 1040. Do you have a loss? It's okay to show a loss once or twice every five years, but if it's more often than this, you may attract the attention of the IRS.
[] After filling out this form, check to see if any one expense line is significantly larger than the others. With the exception of your food expenses, you don't want to lump a lot of expenses into one category (such as Supplies). Use the blank lines on the back of the form to break out some of your expenses. I suggest creating the following categories on the back of the form: Food, Household Items, Cleaning Supplies, Activity Supplies and Toys.
[] Enter the following expenses for your home on Form 8829 Expenses for Business Use of Your Home: mortgage interest, property tax, utilities, house repairs, rent, house insurance and house depreciation. This can be confusing because there are lines on Schedule C that seem to tell you to put these amounts on this form (line 15, 16a, 20, 21, 23 and 25). The only time you would put your house expenses directly onto Schedule C is if you do child care in a home you don't live in.
Tom Copeland - www.tomcopelandblog.com
Image credit: https://www.hrblock.com/tax-center/irs/forms/filing-a-schedule-c-for-an-llc/
For more information, see my Family Child Care Tax Workbook and Organizer.
