Tax/CPP

I know there are a few people on here who have been doing the day home thing for quite some time. How do you guys budget for taxes and CPP every year, if you don't mind sharing? Do you budget a certain amount each month? Do you take a certain dollar/percentage amount from each kids fees? Is there something else you do?
I know there are write offs and those have to come into play but I am trying to figure out my best way to make sure I'm not owing come tax time. Would I be wise to just set a certain dollar amount each month and if so, what would be a realistic number?? How much have people found they roughly owe each year???

Write off everything so you come as close to even as possible! Everything!!! Phone, heat, rent, mortgage, property taxes, electricity, receipts for gas, food, toys, supplies, etc etc. The more write offs the less likely you are to pay taxes. As child care providers we are generally favored in this area!

I got a $1000 refund my first year, second year will be a steady daycare income so I'm trying to keep records of every penny spent to hope for the same. I use spread sheets and an accounting booklet to log everything.

How did you get a refund? You must have other things like RRSPs, previously worked or something unless you pay into CPP and tax to the government monthly and over paid. I'm confused on how you got money back?

I budget for about $500 - $800 come tax time. I just save that amount and then write the government a cheque when I do my taxes. If I pay less then it's a bonus for me...I've never had to pay more.

Yes all that plus we had medical and housing renos included, so definitely had other reasons for right off. Is that unusual to get money back for an average year tho?

So am I wrong to think that I will be paying back a few thousand then? I mean, I wont know until the time comes but if its no more than a thousand roughly, it makes the month to month budget more manageable without taking on another child.

Hi! This is my first year too so not sure how it will all work out! I have 2 full time and 1 part time daycare kids. I have been putting the payments from my part time child into a saving account to have that money ready come tax season!

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Originally Posted by FS2011

Yes all that plus we had medical and housing renos included, so definitely had other reasons for right off. Is that unusual to get money back for an average year tho?

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Yes, it is unusual unless you have RRSPs and such as well. If you have nothing but daycare to claim it's highly unlikely you'll get a return and will most likely pay something. Write off as much as you can to bring your income down to almost nothing.

I am right in the middle of doing last year's taxes and so far, it looks like I owe about $600-700. :(
PS> Yes, I know, I am ridiculously late in doing this!!!
I am positive I could have written more off, but as this is the first full year (2011) that I have been doing daycare, I was not so meticulous with keeping my receipts last year. So I don't have nearly as many write-offs as I could. Lesson learned, and I have been keeping everything I can.
If you aren't able to make a full and clear payment on what is owed, contact the government. I have found them very reasonable to deal with, as long as you communicate, offer a payment plan and stick to it. They won't turn down $50-$100 a month, and then when you are paid off, put that money away for next year.

I generally do my expenses so that one child's money goes in the bank and is not touched at all for the year. This money is ear marked for things like taxes or to help out if something major happens and needs to be repaired or whatever. Which means when budgeting for household things I plan on the income from 3 kids and that is what we live within. That means I have money set aside for taxes, and when I am full I have one child's worth of non earmarked money that can be used for the frills and extras.

I've never paid more than $300-400 at tax time so I don't budget it. I just pay it when I get the bill.

Wow seems like I was the only one who paid a HUGE amount! I didn't take taxes off and had to pay $3500! Beware! It can happen especially if you have a decent year. I am in BC and we pay stupid amounts of taxes so that could be why. They say you should budget around 15-20% for taxes, CPP ect. each month. Trust me...worth doing every month!