Combine family/personal grocery bill and daycare food or seperate for income tax

Hi Ladies! This is my first year (well first week!!) doing home daycare and I am really nervous about income tax time! I have never been "self employed" and I am so scared I am going to have to pay a lot of money at tax time because money isn't being taken off my cheque for taxes...can anyone reassure me?! Should I be putting money away each month to use at tax time?! I have no idea how all this government stuff works with CPP and other taxes I will no longer be paying into...

I am also wondering, I know I can write off a lot of receipts but when it comes to groceries, do you pay for your families groceries/personal items separate and then you daycare food items? Or do you just buy everything at once and submit that one grocery bill? I am not sure how it works...

Thanks so much for the advice!!

The best thing I ever did to reduce my 'fear' of taxes was to take a Home Childcare tax prep course through the Ontario Early Years centre as well as I invested my first two years in an accountant who helped me set up my record keeping and show me the ropes to let me fly on my own.

IMU you do not have to buy everything separate ~ you just need a reasonable way to prove to CRA in an audit how you decided how much was 'daycare expense' over 'personal expense' in regards to groceries cause unfortunately you cannot claim what you or your family eat as a 'daycare expense' so need a way to separate it out.

Some providers take an average two week menu an cost it out to figure out how much per day / per child they spend on food ... I have read on forums that people spend anywhere from $3/child/day all the way up to $10/child/day depending on the types of foods and how many meals or snacks are provided ... I myself my average works out to $7/child/day for food ... ultimately whatever you decide to write off you need receipts to back it up ... keep ALL your food receipts as this is one of our largest expenses you want to be able to show what you paid in groceries to feed your own family so that in an audit they do not decided that your write off was unreasonable on you because you cannot prove you feed your family on top of that expense :(

Here is the CRA link with tips and rules on what we can and cannot write off and how to figure out things like 'shared expenses' of hydro, gas, sewage, property taxes and so forth.

http://www.cra-arc.gc.ca/tx/bsnss/tp.../menu-eng.html

Take a big deep breath doing the taxes is not really that hard ~ you just need an organizational manner that works for you.

As for how much tax you might pay ... that depends on so vary much cause your 'household' income determines what grants and tax breaks you get which will lower your own 'tax payable' ... some providers do not pay ANYTHING because they have a low enough household income to be eligible for enough tax breaks and grants back that those pay anything they would have owed and other providers I have heard pay as much as $5000 at their year end :(

Personally I put away 15% of my income each week into business savings ~ this is used to cover taxes and if I get a year where very little taxes are due than it can roll over into 'rainy day fund allotment' for the next year when enrollment might be low or I need more time off or a big expense comes up.

So I do my own taxes every year, and the best tool I ever found was the payroll deduction calculator: https://apps.cra-arc.gc.ca/ebci/rhpd...o?lang=English
You fill it out as if you are the employer, just remember that you are responsible for paying CPP twice (once as the employer, and once as the employee). Then I figure out what I owe each week, and then I put that aside in my tax free savings account. I make sure I have more than enough money to pay for taxes, and usually I end up with extra. Then when I do my deductions at the end of the year the extra tax money can go into our regular savings account.

As for deductions, I keep all my receipts. I usually deduct half of my grocery bill, since I make a meal for dinner that is twice as big as my family needs, and then just heat and serve for rest for the kids the next day. I claim a partial amount for toys that I buy for the kids (ie birthdays, Christmas) since they end up being used in the daycare.

The CRA has a great link on what you can claim and how. I no longer have the link, but just do to Canada Revenue Agency and type “using your home for a daycare” and it should be easy to find.

Thank you SOO much ladies!! This is all so helpful and I really appreciate your time!!

Yes, definitely put money aside every month for taxes. Last year I paid about $1100 in taxes and the year before that was about $900. It will depend on how much you made and how much your write-offs are.

As for groceries, I buy them with my family groceries. When it comes tax time I charge about $8/day/child. I just add that all up to get my food costs. It works out to be fairly accurate. The foods I buy are pretty expensive (organic, whole grain breads, some gluten free/nut free products).

1100.00 a year based on what salary....

I paid $4200, based on 34K, and had tons of writeoffs, but it didn't help as much, as my husband's income was higher than usual.

That makes me wonder??? I have made 45k gross in my highest enrolment year. I paid just over 3k but hardly any of it is tax. I paid the max to CPP. Without looking I want to say it's about 1800 or so at the cut off mark and the rest was tax but my annual net was still a good 15-20k less after right offs and expenses so I'm not sure why you have paid so much although maybe it depends on the province for provincial tax portion?? My husbands income is high for taxes but my right offs weren't effected by that.

The first couple years, I bought everything for dc separate. I pay a lot back....approx $2-2500 (this is a combo of cpp and taxes) on approx $28k. I deduct all that I can but we are mortgage free which apparently is the reason for high taxes.

This year, in an effort to pay less, I started putting money in rsp's (not much tho) and I now buy all groceries together....they get our leftovers so it actually makes more sense. That alone gave me almost $3000 more to claim on my food expense. Things like feminine products, toothpaste, deo, shampoo etc I buy separate and don't claim. Anything that is only dc is claimed 100%

I like to have $2500 saved for my income taxes so I can pay it off all at once so I put more money into that fund than I do the rsp.

I hope my numbers are right....I'm just going by memory and we all know how well that is!!! Lol

My accountant told me to buy everything together and claim 50% of it instead of buying it separately because he knew it would be more beneficial to me at tax time. I just started doing my totalling. We spent almost $9000 in groceries last year so $4500 of that will be for daycare. I also put other receipts that I know was 100% daycare groceries in with my 100% daycare total section. I don't buy toiletries separate either. I shop and all receipts go in the appropriate section.

I think I made approx. $38,000 last year and had to pay $1400, most of it was for CPP and EI though. This is totally off the top of my head though as I am not really sure. This year I have a huge daycare reno to claim so hoping to have some expenses I can transfer to next year.

I know this is an old thread but I was doing a search to help myself and this is what is says on the CRA website under claiming "Other Expenses" for home daycare.

"It is often difficult, for example, to separate the cost of feeding your own children from the cost of feeding the children in your daycare when all groceries are bought together. This is also true if you do your own laundry at the same time as you do the laundry for the daycare.

As long as the other expense is related to your daycare activities and is reasonable, it will be allowed."