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Hi ladies, I am going to be sending all my tax info into accountant this week. But I was wondering if this is true... I was told that you can claim the amount of hours you spend working on things for the dayhome while the kids are not present. Is this true? For example, the time you spend setting up and doing lesson plans and cleaning. If so, how do you go about calculating this? Thanks
Two ways - actually keep a log of how much time you do eat each week - or track an 'average' week and than make reasonable guesstimate .... I average about an hour a work day in prep / clean up / shopping - I add this to my 'shared expenses' calculation because I am using extra heat / hydro and so forth during this time so I am open and caring for children for 10 hours a day but calculate 11 hours with the additional 'prep time' for work.
Thanks for your help. That is what I was figuring. I was thinking about an hr per day too. Just wanted to make sure it could be used for taxes. Tax time makes me so nervous. This is my first year doing taxes for dayhome so Even more nerve racking. Hopefully all goes well lol
Don't forget the work on the weekends of laundry, washing toys, etc. I normally add two hours per day. The one hour is for getting ready to open and parents arriving a bit early and the other half hour at the end of the day for cleaning up such as putting outside toys away. The other hour is for cleaning, meal prep, lesson planning. Also remember that your hours of work are from the time the first child arrives till the last child leaves so for many that will add an extra hour if you have some kids that arrive early and some that arrive later but then because of that go home earlier. I started out keeping track but quickly learned that it was pretty much the same every week so just started using the average.
Oh my, I never even thought of that!! I just claimed the hours of operation that the daycare was open, and didn't account for meal planning, craft prep, or clean up (which is probably the biggest one!!).
Thanks.... :)
When claiming this, what do you pay your self for this extra time? Is it considered overtime? Are you only doing this if you're with an agency or private too?
You don't actually pay yourself anything. In the calculation for business use of the home one of the figures you need to include is the number of hours the home was in use to run your business. You can use a figure over 24 or you can use a total number of hours over 168 (total number of hours in a week). Either number gives the same answer. The actual calculation is in the using your home for daycare brochure on the revenue canada website. It therefore isn't income that you earn but an additional deduction that you can take from what you were paid by the daycare parents.
Your taxes are the same whether you are with an agency or private. You can claim the same things.
I totally think I am going to up mine to two hours a day too - cause in addition to food prep, program prep and cleaning/daycare laundry - I forgot all the nights of interviewing when filling a spot!
I think I'll be adding time for that too. I currently work 6am-6pm (meaning there are children in my home that don't belong to me seriously for 12 hours) then after they leave I have to clean and get everything ready for the next morning...not to mention the time to reply back to requests, update ads and interviews for sure ( I have yet to have an interview under an hour long). Do you think they would question 14 hour work days?
Hard one Michelle - technically we can claim a 'reasonable amount' ... it depends on who is defining that reasonable if your business hours are 12 hours a day and you argue you cannot fit any prep/clean up time in that time frame and do it 'after hours'?
My first year I was open 7:30 - 5:30 and than claimed an 11th hour for prep ... I reduced my hours so last year I claimed 9 hour work day plus an 'hour' of prep time for a total of 10 hours .... even though I sometimes have a client in extended hour care before or after than 9 hour work day but I honesty DO do most of my prep during that extended period so my 'program hours' are 7:30 - 4:30 but I claim 7-5 on my taxes ... I have one child who comes before 7:30 and another who is here past 4:30 some days ... I was thinking of adding that hour back for the interview prep and advertizing cause I had not really thought of that and THAT takes a lot of time for sure.
Thanks Reggio, I was thinking it would seem too much. I can absolutely fit in cleaning up and lesson plans and what not during nap time and when its just the one little one left at 5:30; however, I always wonder what parents would think if I vacuumed while their little one was still here? Would they consider that not showing her proper care and not paying attention to her? I always felt that I had to do all the 'other' things after daycare hours.
I have been doing 13 for about 4 years with no question. 14 is only 5 more hours out of the 168 and in many businesses they are open weekends too so shouldn't set off any red flags.
True - and if your website and contracts all 'back' that you are already open 12 hours or work weekends and so forth so that you can 'prove' it is reasonable if ever audited and you are confident to defend that write off go for it ... that is the challenge with taxes and the 'reasonable expenses' cause what is reasonable to US might not be to CRA .... I had an argument with an accountant once who tried to argue with me that belonging to a 'professional association' was not a business expense nor was attending 'professional development' because all we do is BABYSIT and therefore CRA is going to say we do not NEED either of those to do business so therefore not a 'reasonable expense' for this business .... needless to say dude was never hired to be MY accountant and I even considered snatching a few of his hairs and getting a little Vodoo doll for his audacity - not to mention he felt that $2.50 a DAY was reasonable for food/supplies cause its not like they eat much ... I feel sorry for the poor people who do use him and are paying more TAX as a result of his 'unrealistic' views of what is 'reasonable' ... do not think dude has gone grocery shopping since 1960 when a loaf of bread cost $0.05 not to mention abreast of how children SHOULD eat cause $2.50 I would not be able to give them fresh fruit and even canned fruit would be 'one slice of pear' from a can :(Quote:
Originally Posted by playfelt
Reggio, I agree that that accountant hadn't been shopping in years! I can't imagine trying to feed the kids for $2.50/day that's crazy! I would say mine guys eat at least 3x that each. Its shocking just how much the little ones can consume in a day and I try to provide all healthy meals and snacks! I have one 18 month old who literally can eat the same amount if not more than her 6 year old brother!
Yup - I would use a $2.50 a DAY budget at morning snack and have to give em water for the rest of the day if I had to follow his rules ... for morning snack my crew will eat two tubs of Activia Yogurt - cause I like the pro-biotic yogurt for their growing bellies ... so $3.99 x 2 so $8.00 and two pints of blueberries or raspberries which this time of year are at least $3.00 a pint so $6.00 ... so that is $14 for the morning right there or $2.80/child ... still got a lunch and afternoon snack to feed em :rolleyes:Quote:
Originally Posted by michellesmunchkins
Due was so 'conservative' with his advice it was scary ... I am not aggressive in my booking keeping in any means but I want every possible 'reasonable' deduction out there!!!!
WTH?? I would say I spent (haven't done last years numbers yet) around 20k in food last year alone. I haven't done the math on that, but methinks it's a wee bit more than $2.50 a kid!!!
That guy is/was out to LUNCH (and a cheap one, at that, I'll bet)!!! :rolleyes:
Has anyone ever been audited before? What do you think 'red flags' are that they look for?
I was told a couple of years ago that if we consistently make "no" income, or are in the negative, as it sometimes happens during the first few years of a business, the government smells a rat. The idea being, if you have been doing this for 5 years and still earn ZERO income, you probably aren't going to keep at it, so something must be up. Basically, we have to show a little bit of profit, even if it's only 5 grand or so.
AGREED ... nobody is going to stay in a business where their income is ZERO specially one that requires such emotionally and physically demanding tolls on them ;)Quote:
Originally Posted by mom-in-alberta
We can earn up to $10, 500 and not pay 'tax' on it anyway not to mention you want to earn something to pay into CPP for so that when retirement time comes you have something in the POT to draw from - assuming there is CPP still there when it comes time for us to retire :rolleyes:
A few years ago many caregivers in the Ottawa area were targeted for audits. The results were not favourable and a couple people did end up taking their claims through the tax court system - and won!. Basically it came down to auditors not understanding our business either. Water is one of the things I mentioned earlier that was disallowed but in court person argued what you mean we NEVER wash a child's face, NEVER use water to boild veggies for lunch, NEVER wash their bedding, etc. of course it was added back to the deductable list. Another thing I remember being disallowed was the ketchup - again obviously the auditor didn't have kids. Her swingset she claimed 100% dacyare and auditor said no 50% personal and 50% daycare but she argued since her own kids were aged 16 years and older that they were not able to use it and therefore it was just for the daycare and again she won.
The pestering of caregivers here in Ottawa lasted a couple years and then they moved on to another home based sector. It was as if we were targeted. But the person I am referring to claimed everything and I mean everything so yeah red flags would be excesses in any catagory.
Proving mileage was one really sticky point with them. If you drive to playgroup you have to sign a log in usually so there is proof available that you did go there at least. When you drive to the park there isn't so how do you prove that you drove to the park 3 times a week.
Really the best you can do is have receipts for everything that you are claiming and be prepared to back up what you write down so if your log says Monday drove 3k make sure it says to where as in what park and then is consistent so every time you go to that park the mileage claim is the same 3k. Just being able to say why you claimed something should you be asked can go a long way in an audit.
Make your expenses in proportion to your income. Example in times of lower attendance I tend to play games more than make crafts to keep costs down. That means at the end of the year my expenses are more in proportion to what I spend in years I earn more. That can't always be helped but glitches happen in any business.