Presented by Tom Copeland, JD Family Child Care Trainer and Author Hosted by the AFSCME Department of Education

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1 An Introduction to Family Child Care Record Keeping Presented by Tom Copeland, JD Family Child Care Trainer and Author Hosted by the AFSCME Department of Education

2 Welcome This class will help you Understand what business records to keep Learn to identify business deductions Calculate your Time-Space Percentage Claim your proper car and food expenses

3 Instructor Tom Copeland, JD Partnership with National Association for Family Child Care Call Tom: ex 321 Tom:

4 After this class You will be able to download the materials from this class on You will get a certificate after you submit the quiz at the end. CEU credits vary by state. Contact your local CCPT or AFSCME affiliate office. We are working with crediting agencies to have the workshops approved. Questions on AFSCME programs: Kate Headley kheadley@afscme.org or (202)

5 AFSCME is uniting child care workers! AFSCME CCWU (in NJ) CCPT VOICE CCPUNITED

6 Business Resources Hundreds of free articles, newsletter, tax preparer directory, and other resources Minute Menu Kids Record Keeping Software program Books by Tom Copeland from Redleaf Press ( ) Family Child Care Record Keeping Guide Family Child Care Tax Workbook and Organizer Family Child Care Tax Companion Family Child Care Inventory-Keeper Redleaf Calendar-Keeper

7 Poll - 1 How long have you been in business? 1) Not yet in business 2) Less than 1 year 3) 1-5 years 4) 6-10 years 5) More than 10 years

8 Poll - 2 Do you love record keeping? 1) Yes 2) No

9 Record Keeping You may not love record keeping but.. Keeping good records means big rewards! The better your records, the lower your taxes For every $10 of expenses you claim, you ll save $3-$4 in taxes

10 Want to make more money? Three ways Raise your rates Care for more children Reduce your taxes You ll earn more per hour doing record keeping, than you ll earn per hour caring for children

11 Three Key Rules of Record Keeping Save all receipts for expenses associated with your home Record all meals and snacks served to the children Track all hours you work in your home

12 Track Your Business Income Parents Food Program Subsidy program Grants

13 Protect Yourself Record sources of all deposits into your business/personal bank accounts Spouse s paycheck, checks from daycare parents, transfers to/from accounts, gifts from mother, etc. Get signed parent receipts at end of year Keep a copy

14 Child Care Tax Credit Most parents can claim the child care tax credit when paying for child care Parents should give providers Form W-10 to obtain provider id# Providers a can give parents Form W-10 and an end-of-year receipt, but are not required to do so

15 Employer Identification Number Get an EIN to avoid identity theft Use EIN in place of your Social Security Number (Search for EIN) When asked why you want EIN, enter Started a New Business Or call IRS at

16 Track Your Business Expenses Keep adequate records of all expenses Mark all receipts Organize your records by category of expense, not by month Save all your business records for at least 3 years

17 Adequate Records Receipt Cancelled Check Credit/Debit Card Statement Written Record (created by provider) Photograph

18 Mark Receipts 100% Business Shared Put into folders with other similar expenses

19 Supply Expenses 100% Business Shared $800 + $1,000 = $1,800 x 40% = $720 x 40% $400 Correct deduction for supplies: $800 + $400 = $1,200

20 Car Expenses Claim car trips that are primarily for business purposes Don t need to keep odometer readings Keep adequate records of business trips Receipts, mileage log, cancelled checks, debit/credit cards, written records, calendar notations, photographs

21 Poll - 3 A provider goes to grocery store to buy business and personal food Can provider claim this trip as a business trip? 1)Yes 2)No 3)I don t know

22 Standard Mileage Method 2008 standard mileage rate Jan - June 50.5 cents per business mile July - December 58.5 cents per business mile Can also deduct parking, tolls, business portion of loan interest and property tax

23 Actual Expenses Method Claim business portion of: Gas, oil, repairs, car insurance, parking, tolls, depreciation on the car, car loan interest, etc. Business portion = Business miles Total miles

24 Poll - 4 Are you enrolled in the Food Program? 1) Yes 2) No

25 Food Program Join the Food Program! You are always financially better off You are always eligible for the lower Tier II rate Can receive higher Tier I rate if you are low income, serve low income children, or live in a low income area Reimbursements for children are taxable Exception: reimbursements for own child

child/per year If paperwork for Food Program takes 3 hours a

26 Benefits of Food Program Joining the Food Program is like winning the lottery You ll receive about $500 or $1,000 per child/per year If paperwork for Food Program takes 3 hours a week, you ll earn about $12.80 or $26.66 per hour (for 4 children)

27 Standard Meal Allowance All providers eligible to use this rule Can claim up to 1 breakfast, 1 lunch, 1 supper, and 3 snacks per day/per child Never count meals for own children

28 Standard Meal Rate 2008 rate $1.11 breakfast; $2.06 lunch/supper; $0.61 snack 2009 rate $1.17 breakfast; $2.18 lunch/supper; $0.68 snack

29 Keep Food Records Keep daily record of all meals and snacks served Use monthly Food Program claim form Track non-reimbursed meals daily on a calendar

30 Actual Food Cost Method Estimate your actual food costs Many different methods to use Must keep all food receipts - business and personal

31 Three-Step Process for Claiming Expenses 1) Is it Deductible? 2) How Much is Deductible? 3) When Can I Deduct it? (Follow the above 3-step process of all expenses, except the car and food)

32 Step One Is it Deductible? Ordinary and necessary for your business Typical, helpful, appropriate, useful Your home is an educational environment for children Parents expect you to maintain your home as a home Expense to clean, maintain, or repair home is probably at least partly deductible

Common Deductions House Property tax, mortgage interest, utilities, house repairs, house insurance, house depreciation Outdoors Trees, snow shovel,

33 Common Deductions House Property tax, mortgage interest, utilities, house repairs, house insurance, house depreciation Outdoors Trees, snow shovel, rake, new siding, paint, etc Living room Couch, table, chair, blinds, curtains, rug, lamp, etc. Bathroom Towels, toilet paper, light bulbs, soap, etc.

34 Step Two How Much Can I Deduct? 100% personal purposes No business deduction 100% business use Deduct 100% of the cost Both business and personal Use the Time-Space Percentage

35 The Time-Space Percentage Number of hours your home is used for business = Time Percent Total number of hours in the year Number of square feet of home used regularly for business = Space Percent Total number of square feet in your home Time Percent X Space Percent = Time-Space Percentage

Time Percent Count hours When children are present in your home From when first child arrives until last child leaves When children are not present in your home and you are

36 Time Percent Count hours When children are present in your home From when first child arrives until last child leaves When children are not present in your home and you are conducting business activities Cleaning, activity and meal preparation, parent interviews/calls, record keeping, Internet, etc. Track these hours for at least 2 months/year

37 Counting Hours 11 hours/day caring for children (M-F) = 55 hours/week = 33% of year 14 hours/week business activities when children not present = 8% of year Typical Time Percent = 35-45%

38 Space Percent Count rooms that are regularly used for your business Regular use means two-three times a week Count basement and garage as part of home Most providers use all rooms in their home on a regular basis

39 Time-Space Percentage 40% Time x 90% Space = 36% Time-Space Percentage 45% Time x 100% Space = 40% Time-Space Percentage

40 Exclusive Use Room Rule Allows providers to claim higher Time-Space Percentage Room must never be used for personal purposes! Examples: playroom, storage room, crib room

41 Poll - 5 Do you have an exclusive use room? 1) Yes 2) No

42 Step 3 When Can I Deduct It? If an item costs less than $100 deduct it in one year If an item costs more than $100 depreciate it Depreciation - spread deduction over a number of years

43 What Can be Depreciated? Office Equipment Computer, printer, fax, copier, scanner Personal Property Furniture, appliances, play equipment Land Improvement Fence, driveway, playground equipment Home Improvement Remodeling, new furnace, deck Home

44 Tax Consequences of This Webinar Count the hours spent on this webinar as part of your Time Percent Depreciate a portion of the cost of your computer/printer and monthly Internet fee

45 Summary Three Key Rules of Record Keeping Save all receipts for expenses associated with your home Record all meals and snacks served to the children Track all hours you work in your home

46 Closing Taking care of children is only half your job The other half is taking care of your business It takes a special person to be business-like in a caring profession You can do it!

47 Contact Tom For Help Call: ex Visit for more programs like this one.

2018 Tax Changes Affecting Family Child Care

2018 Tax Changes Affecting Family Child Care By Tom Copeland The standard mileage rate is $.545 per business mile. ($.58 for 2019) The standard meal allowance rate for 2018 (and 2019) is $1.31 breakfast,