October 25, 2009,
K.N. asks from Indianapolis, IN on October 16, 2009
Income Taxes for Babysitting
I currently babysit for one child. Not a lot of money to brag about, but it allows for a little cash each week as well as a playmate for my two children. I was notified that the parents want to claim the child care expense. So, I made a call to a tax prep office. They said I need to file a Schedule C and I can claim some expenses to offset the income. They couldn't give me a list of what I could claim. So, now I will be spending a lot of time digging thru my receipts and bank statements. But, I don't want to overlook anything. If you have experience with this, can you give me some pointers? I had considered advertising to babysit another child... but does it really work out as a profit?
J.C. answers from Cleveland on October 17, 2009
I'm only responding to the question about whether or not it is worth it, profit wise......
Definitely! When I had my center in my home, I charged $25.00 a day, and had six full time children. That's over 37K a year. If your husband makes enough to support the family and pay all the bills, your income can take care of things like new cars, vacations, Christmas, etc.
The work is very hard, (if you do it right) but SO worth it!
Plus you get to be home for your own children, and can get your laundry done during nap time! :)
Email me if you have any questions about any of it. I did it in home for five years. (Now I operate a center out of home)
K.J. answers from Dayton on October 18, 2009
You've gotten some great advice already, but you can also call your local resource and referral for child care in your county. Miami County is Child Care Choices, ###-###-####. It's a wonderful, free resource for child care providers. (I'm biased...I work there!) I would rely on them for advice as opposed to asking your accountant. Some accountants have given our providers bad advice and encouraged them to write off more than they should have.
S.S. answers from Lafayette on October 23, 2009
All the gals just about covered every things deductible.
One thing, if asked you must supply your social
security number or get an EIN number from the
You see, the IRS will let someone paying for a
babysitter report anyone not giving their social
security number for them to electonically file.
Other wise the parents can paper file a federal form
and calm your refused to furnish needed information.
K.W. answers from Columbus on October 25, 2009
I have never babysat in my home for income but have taken my child to an in-home babysitter. The sitter was very up front about being paid in cash only so she didn't have to claim it as income. At first I was ok with that, we were getting a great deal so i figured I could turn the other way even though personally I would have felt compelled to claim the income if I were in her situation. As our time with her went on, there were several reasons why we considered switching sitters and the cash issue became one of them, she didn't have any record of our payments to her and technically neither did I. This became a minor dispute one day over which week had already been paid, etc. Between that and our other reasons we decided to switch sitters. It saddened me to see how caught up she was in getting away with the no tax thing, she watched tons of other kids too so I know she was making a very good living off of the babysitting. I know your stuggle is more towards the hassel of keeping track of the extra receipts, etc but once you get a system down, learn what you can write off, etc, each subsequent tax year will be easier. Plus, I feel it's always better to be on the side of honesty and transparency. The parents of the child you watch are probably both pleased with the work you do as well as the price you charge them. I wouldn't let their request insult you or anything, they're just looking for the best break they can get and there's no reason that you can't do the same too by claiming as many deductions as possible! Who likes paying more taxes than necessary? In fact, once you go thru this you may find the motivation or ability to take on another child or two and really make it a business, if you so desire. Best of luck and keep taking good care of those precious little ones!
R.H. answers from Cleveland on October 17, 2009
I have done the baby sitting and have also been a tax preparer. What would you like to know? If you babysit from your home you can write off part of your mortgage payment, electric bill,any toys that you buy. There are a lot of things. Do you have any children yourself? Depending on how much you made on how big a deal it will be. send me an e mail and I will try to answer any question that you might have.
Z.R. answers from Cincinnati on October 19, 2009
Get Turbo Tax - it's very user friendly, has all the forms and will walk you through eveything... and the cost of the software is also deductible.
B.B. answers from Indianapolis on October 16, 2009
I do agree with the other person who has posted that you should be charging closer to what the "regular day-care centers" in your area are charging. That's what we base what we pay our sitter next door on.
For filing schedule C's, make sure that you keep all your receipts for food/snacks/diapers/wipes, etc. If you get toys, coloring books, crayons, paints, bubbles, etc. for the kids while you're watching them, then all that should be able to be counted. I think they'll only let you claim 1/2 the food expenses, but I can't remember.
Don't forget too that you'll want to pay social security too. That'll add to your benefit when you retire.
Basically, treat it as "K.'s Daycare", keep every receipt, and attach it to a sheet of paper listing what you bought and for what purpose, then put it in a file folder. If you make any phone calls that are long distance or "above/beyond" minutes on your cell phone, that counts too. If you take them to the Children's museum, or drive through McDonald's - then all that counts too.
If you're not making some profit from doing it, then it won't be worth the time and effort.
My neighbor had lost her job several years ago and was looking for something she could do from home that would allow her to take her daughter to school and pick her up after school. I told her we'd give her a car seat. There are trade off's. She doesn't have insurance, but she's been able to go check on her parents if needed, etc. or go to the store if she needs to during the day. It's worked out for both of us.
Just a few thoughts....for what it's worth...
L. answers from Cleveland on October 16, 2009
If the people want to claim this as a tax write off , you should raise your rates enough that you are turning a profit.
I would call around to day care centers and see what they charge. You are offerring more than they do because you give one on one attention and probably provide meals and snacks as well.
When I had my kids at a private sitter, I paid her in cash and did not claim it as an expense on my taxes as she did not wish to pay taxes on her income.
A good babysitter is worth her weight in gold and you should not be selling yourself short. Charge more!
D.T. answers from Indianapolis on October 17, 2009
Go browse the small/home business books at the library or bookstore - there are lots of them out there with good advice.
Tax-wise, babysitting/home daycare is one of the best businesses to be in but most people do not take all the deductions allowed by law.
Your mortgage/rent... you can deduct the percentage of the home used by babysitting. For instance... if you use the kitchen (meals/snacks), the family room, living room and bedroom (for naps) then those 4 rooms are deducted. Take the total sq ft of your house and the total sq ft of those rooms and get the percentage. If it's 30% of your home, then you deduct 30% of your mortgage/rent. Ditto with utilities. With most home businesses you can only deduct the home office which is never used for anything else -- home daycare is the exception... you can use the kitchen/living room for personal use and still claim it.
All food, snacks, drinks, toys, DVDs, electronics (need a new TV for the living room so the kids can watch?), music CDs, gas/mileage when driving the child, etc are all tax deductible. Basically - anything that you spent money on because you are watching the child(ren) is a business expense. (the side benefit, of course, is that your children can enjoy some of these purchases... some things you would be purchasing anyway for them are now tax deductible).
J.S. answers from Mansfield on October 18, 2009
I say if that person wants to claim it then they need to go to a daycare then. These babysitters on the side give you a better deal than the daycares ever will. If they want to claim it then tell them you are going to charge them more. If they decide not to then keep charging them the cheap rate. They can't claim you unless they have your social security number otherwise there is nothing that they can do on their taxes.
D.B. answers from Cleveland on October 17, 2009
Some things you might be able to claim are percentage of utility bills, A/C and heat, electric, gas, water, carpet and upholstery cleaning, snow removal, lawn care service, (So children don't get stung by bees with the clover in the grass) cleaning service, or cleaning supplies, playground equipment, sand for the sand box, if you have a pool, the maintance and chemicals, toys, food you use to feed them, milk and juice, cable, DVD's, computer and games for it, also the telephone if you have a separate line, books, any repairs that have to be made to your home, that were destroyed accidentally (of course) by the children, paint or torn wallpaper, porta cribs, baby swings, jumperoos, high chairs and anything you use for the child's
care and entertainment, and birthday and Christmas gifts you buy for them. (This is called hospitality or gratitude)along with car seats and gas for the car if you have to drive them anywhere, also car and homeowner's liability insurance, and don't forget the cost of the advertising as well as business cards. These are just some ideas, you may not use all these things depending on the age of the children, but you can check and see what is compatible with your circumstances.
T.S. answers from Cincinnati on October 17, 2009
You can go here to figure up an amount to write off for food. http://familychildcaretaxes.com/tax_tips_article.php?blRe...
You have to figure up all amounts for the first half of the year, and then figure up all amounts for the second half since the government changes the amounts mid-year.
Here are the amounts for Jan 1-Jun 30 '09:
$1.17 for each breakfast
$2.18 for each lunch or supper
$0.65 for each snack (up to 3 per day)
and the amounts for Jul 1- Dec 31 '09
$1.19 for each breakfast
$2.21 for each lunch or supper
$0.66 for each snack (up to 3 per day)
This way you don't have to keep receipts for each food purchase, and it also lets you know that you're only deducting the amount you used for the childcare food versus all food for your family. I use this every year and it actually ends up giving me more of a deduction than I spend typically. Also, you don't have to be on the Food Program to use this deduction.
I also get to write off interest from my van payment, mortgage interest, utilities (except rubbish as it doesn't change), percentage of cell phone, internet, computer, craft supplies, field trips, mileage, etc. Providing childcare in your home is unlike doing any other business from home. You get so many deductions! I always file with H&R Block, and the man there just reminds of something if I forget it.
L.G. answers from Terre Haute on October 16, 2009
I haven't been in your exact situation but I was self employed for 3 years and had to fill out the schedule C. As a daycare provider in your home the biggest deduction you would be entitled to would be a portion of your rent/mortgage payments and utility payments (for example if one room of your house is solely devoted to daycare and you have a five room house, 1/5 of your rent and utilities are a business expense) These claims are the easiest to back up because you can show proof of what your rental payment and utility bills have been without going to too much trouble. Also if you provide transportation for the child you watch then figure up the miles you drive round trip just to pick up/drop off the child and multiply that by the number of days that you do it per week, then multiply again by the number of weeks you watched them. There is a set amount that can be deducted per mile. Those two deductions alone will probably help out a lot and then you can use any other items such as child proofing equipment, toys, etc that you do have receipts for. You aren't likely to be audited anyways as long as your deductions aren't way out of line with what you made. Beyond the ones that I've listed you can basically claim anything that you use to carry out your business as a deduction, just don't go overboard with it. The other thing to keep in mind for the future is that you can only claim a loss from a business for like 3 consecutive years, so be careful that you don't use every deduction in the book and end up showing that it cost you more to have the business than you made because you can only do that so many times.