How to Track Hours When Children Aren’t Present
Most family child care providers keep relatively good records tracking the hours when children are in their care. But few providers are keeping accurate records of their work when children are not present.Want to reduce your taxes? Keep track of the hours you work when children are not present. I can’t emphasize this enough. For years I’ve seen providers pay too much in taxes because they didn’t do this.
I’ve written about this before: “The Single Most Important Thing You Can Do to Reduce Your Taxes.”
Now I want to tell you exactly how to record the hours you work in your home when children are not present.
For most providers, tracking the hours children are in their home is relatively easy. You can fill out your Food Program monthly claim form, enter attendance records in your Minute Menu software, or collect sign in/out sheets from parents.Keeping records of when you are working when children are not in your home is more difficult.
You can count all hours spent on activities that you wouldn’t be doing except for the fact that you are a family child care provider. This can include many things: cleaning, activity preparation, meal preparation, talking to parents on the phone, office work, time on the Internet looking for recipes, etc., cleaning toys, reading this blog (!), and so on.
You can’t count hours if you are away from home (shopping, training, etc.), even though you may be engaged in a business activity. Only include hours when you are physically at your home and children aren’t present. Don’t count hours spent on personal activities (mowing the lawn, taking out the garbage, making your own bed when children don’t sleep in it), etc.
Before you try to count hours, ask yourself this question: “If I wasn’t a family child care provider would I be doing this activity?” If the answer is “yes” then don’t count this time.
How to Keep Records of Hours Worked When Children Aren’t Present
You should keep careful records of these hours for at least two months each year. If you can do more than two months, do so.
Because tracking these hours is so important, I want to give a detailed example of exactly how to keep records showing these hours.
First you want to pick out the two months you will track these hours. Pick two months that are representative of the entire year. Maybe, one month in the summer and one month in the fall.
Then start marking on the calendar what the business activity is and the time of day you conduct it.
Tracking Regularly Occurring Activities
There will probably be certain activities that you do on a regular basis, either daily or weekly. Such activities could include: cleaning, office work, meal preparation, or activity preparation. For these activities write out a description of what you do each time you conduct this activity. For example:
Cleaning
Am cleaning: Monday – Friday: wipe down kitchen counters, sweep kitchen floor, make up beds for napping, vacuum living/dining/playrooms, put away clutter, load dishwasher and run, bring out toys, wash and disinfect toysPm cleaning: Monday – Friday: clean off kitchen counters, sweep kitchen floor, do a load of laundry/fold towels & clothes/put away, put dishes into dishwasher, put away toys, clean bathroom, rearrange furniture, vacuum living/dining/playroomsSunday: wash kitchen floor, take out garbage, clean first floor windows, sweep front hallway, clean bathrooms, clean up cat litter box, clean children’s toys
Office Work
Send/answer emails with parents, pay business bills, record expenses and enter data into Minute Menu software, file paperwork, write newsletters, photo copy forms for parents, communicate with parents on Facebook, place an ad on Craigslist
Meal Preparation
Collect recipes, prepare menus, make up a grocery list, unload groceries, cook/prepare bread/lunch.
The more detail you can add to your activity description, the better. The purpose of this detailed description is to show why it takes you the amount of time you are recording to do each activity.
I once helped a provider who claimed she spent two hours a day on business cleaning activities. The auditor didn’t believe she spent that much time cleaning. But she won her case when she presented the auditor with a full-page description of what she did each day.
Start recording on your calendar when you do these reoccurring activities. For example, you might enter “6-7 am cleaning” on Monday. You don’t have to say anything more about what “cleaning” means because you’ve already written out a full description of what you are doing during this time.
Most providers spend more time on cleaning than any other business activity, so pay close attention to these hours. You can’t count all the hours you clean your home because some of these hours represent personal cleaning time. Personal cleaning is the time you normally spend on cleaning up after your family.
So, if you spend one hour on Sunday cleaning (as described above) you wouldn’t count the entire hour as a business activity. This is because some of the time is spent on personal cleaning (garbage, cat litter, and part of the time to clean bathrooms that are used by your family and the day care children). There is no fixed rule to determine how much of the time spent cleaning up after both your family and your business you should count as business time. Make a reasonable guess based on the number of family members and day care children that use the space. Maybe you would record that you spent one hour cleaning on Sunday and count 45 minutes as business time.
I believe it is reasonable to count all the time spent cleaning just before the children arrive and immediately after the children leave. In the end, you need to record some personal cleaning time on your calendar. If you don’t, the IRS is likely to assume that some of the business cleaning time you recorded was personal and won’t allow you to count it all.
Tracking Irregularly Occurring Activities
Many of the business activities you conduct in your home when children are not present do not occur on a regular basis each day or week. Such activities may include parent interviews, parent phone calls, doing work at home for your family child care association, preparing activities for the children, etc.
Carefully track these activities on your calendar for two months. Be sure to indicate the time of day you do these activities so the IRS can see that you are not doing them when children are present.
If you are spending time on activities that need more explanation than the few words you put on the calendar, don’t hesitate to write out a detailed note on a separate piece of paper.
Tabulating Your Hours
Assuming that the hours you worked in these two months is fairly typical of the other months in the year, use the average from these months to determine how many hours you spent on these activities for the year. I’ve created an example of what your two months of recording hours on your calendar might look like for
and
Once you have successfully filled out two months of your calendar with these business activities, add up all of the hours and divide them by the number of days in your two months.
n my example, the provider worked 96 hours in two months divided by 59 days in those two months equals 1.63 hours per day. Multiply this by 365 days in the year to get 595 hours for the year. Finally, add 595 hours to the total number of hours you cared for children to determine the total number of hours you worked in your home.
These hours are recorded on IRS Form 8829 Expenses for Business Use of Your Home line 5. (Notice that the provider recorded one hour of cleaning time on Sundays but only counted forty-five minutes as business cleaning. Also, she recorded one hour of personal cleaning time on Saturdays that she did not count.) Was all this work worth it? 595 hours divided by 8,760 hours (the total number of hours in a year) is equal to 6.8%. That’s a lot. This provider could claim 6.8% more of her house expenses (property tax, mortgage interest, utilities, house insurance, house repairs, and house depreciation). If her house expenses are $10,000, she is able to deduct an additional $680. Another way to look at this is for every 1.5 hours you work cleaning your home your Time Percent will rise about 1%. According to a national survey, providers spend about 14 hours per week on business activities when children were not present in their home.
In Conclusion
I know that most family child providers do not like keeping records. You may even hate just thinking about doing what I describe in this article! But, again and again I see providers who are being audited who have not done this work and they ended up paying more in taxes than they should. It’s up to you.
Tracking hours you are doing business activities in your home when children are not present will save you more money on your taxes than almost anything else you can do.
Tom Copeland – www.tomcopelandblog.com
Image credit: https://www.pxfuel.com/en/search?q=calendar
For more information about how to track the hours you work, see chapter 3 in my book Family Child Care Record Keeping Guide.
