[ChristinCarper]

Yes, It may sound odd but I have been doing daycare for the past 8 months and totally forgot about the taxes part. I was recently notified that they were going to claim me as there daycare provider this year and I have not kept any receipts. I wanted to know If I could claim square footage (which I know I can) on my fathers house which I do daycare in. Since it's not in my name and none of the home bills are... how does that work? Have any suggestions?

[Clough]

Hi, ChristinCarper!

Since your question really has to do with taxes, I've moved it from Home-Based Business to this forum topic area where it will be more likely to get noticed and addressed by our Tax Experts.

Thanks!

[Fr_Chuck]

You can claim a part of the home expense you use ONLY for your business, if you use the front room and dining room but also use those for perosnal use, it is not a 100 percent business usage.

Also you have to be paying the bills, so how much rent do you pay, how much of the electric do you pay. Do you "rent" pay them for use of the home.

You will have about 30 to 35 percent of the money you show as profit that you will be paying as taxes. That is why of course costs for services have to include that

[Zazonker]

Christin,
As described you are not running a business out of your home, as such, you don't have a home-based business. Your father may...

You don't indicate what the situation is with your father's house. But, in essence, anything which you want to claim as an expense is income to him. You would have to set him up in business as a landlord from whom you are renting space for your business. He (maybe you are the one doing the paperwork) might claim that he is renting 1200 square feet to you, or 4 rooms to you, etc. and offset a percentage of his utilities and other expenses - related to things that you actually use, as an expense against the rent that you pay him. This would be handled on a Schedule E filed with his taxes.

An interesting twist here is: if you and your father are very close and sharing resources, a number of things can be done to minimize tax liability. If you are in a higher tax bracket, you could pay more rent for the space, effectively transferring the income to him. If he is in a higher tax bracket, you'd want to balance everything and make your rent equal to the expenses that he can claim against it.

Essentially for the IRS, this would be a reasonability issue. If you have 6 daycare customers providing and income of $50/day/child for a gross income in the range of $75K and claim $5K/month or $60K/year as rental expense, they are not going to believe it. If the claimed expense is more in sync with local rental rates, it'll fly.

But, to reiterate, whatever you claim as an expense is income to your father's rental business.

If, when you look at the numbers or for other reasons it doesn't make sense for you to do this, just ignore "facility cost" and pay your income tax based on what you took in and paid out to others.

Caveat: Please don't take this as legal advise, but, if it helps you get very rich it's okay for you to share a little of it with me.

[AtlantaTaxExpert]

Christin:

My best suggestion: RUN, don't walk, to your nearest competent tax professional, preferably an independent with some experience advising other day-care providers like yourself.

As Zazonker noted, you have a very complicated situation in that you are sharing a home with your father, so you REALLY need professional help wth your taxes.