Calculating how much to claim?

So I know that if you use your whole home for daycare, there is a formula to use to calculate the percentage you can write off. I know that if you use half of your home for dc only, you can claim 50%. Here is my situation....

My daycare is in the basement and is exactly half of my home. It is dc only down there so I have been writing off 50% in the past couple years for household bills. However, this year I have started to use my upstairs a bit more often. The kitchen, bathroom and living room. We spend anywhere from 1-3 hours up here depending on the day.

Am I allowed to calculate that ON TOP of the 50% or do I have to use the formula even though the basement is solely daycare? I was thinking that I could use the formula to calculate the space used up here and add it to the 50%. Does it work that way or no?

I am going to ask my accountant about it but thought I'd ask you ladies first so I have an idea of what the answer might be. Thanks!!

I'm very interested in this answer because I'm in the same situation. I have a big daycare room used just for daycare, but we eat in the kitchen, and also play with playdough and crafts. And we use the bedrooms for naps. So I've got dedicated daycare space and shared space.

It was my understanding that you could either use the 50% OR use the calculation of hours but not both. I could be wrong - would be interested to see what you get told from your accountant.

Mickyc that is what I understood as well but it doesn't really make sense in situations like mine. My daycare space is only dc but if I use the upstairs I would like to claim if it I can. If I can't, it's no big deal and I will just stick to claiming 50%.

there is info on the cra website. It's a complex calculation though. I use about 70% of my home for daycare, but when you do the % of time calculated (detailed), it only works out to 21% to write off. I am wondering if there is a work around or another way to calculate cuz it seems really low

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Originally Posted by jennnee81

there is info on the cra website. It's a complex calculation though. I use about 70% of my home for daycare, but when you do the % of time calculated (detailed), it only works out to 21% to write off. I am wondering if there is a work around or another way to calculate cuz it seems really low

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How many hours is the 70% used for daycare? I am curious because this is my first year claiming taxes and 21% does seem low for 70%.

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Originally Posted by jennnee81

there is info on the cra website. It's a complex calculation though. I use about 70% of my home for daycare, but when you do the % of time calculated (detailed), it only works out to 21% to write off. I am wondering if there is a work around or another way to calculate cuz it seems really low

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I assume you are referring to the equation (hours open/24 hrs a day) x (days open/7 days a week) x (rooms used for dc/total rooms in hours)? That is the equation you use if you use your whole house for dc and do not have a dc only area.

I use about 75% of my house for daycare but only 50% is dc only. It's the other 25% that I would like to use the formula for and add it to the 50%. I don't know if that is allowed though??

I have a booklet from Canada Revenue Agency entitled "Using Your Home For Daycare". I read through the section about Business Use of Home Expenses and it doesn't say anything about not being able to claim both 'rooms for daycare use only' and 'Rooms used for both daycare and personal living'. There make very clear statements elsewhere about what cannot be claimed, so I believe they would have done so for this section if it was not allowed. You just have to make sure your business-use-of-home expenses are not more than your net income before deducting the use-of-home expenses.

I will be claiming both types, I plan to do the calculations for each and then add the two together.

Thanks Amanda! That is what I read on the site and I don't see anywhere where
it says you can't either.

So my next question....my downstairs is dc only so 50%. My upstairs, do I calculate the hours I am open or the hours we spend up here? And than add it to the 50% correct?

There are 168 hours in a week and if you are open for 10 hours x 5 days that is only 50 hours which is about 30% of the week.

That is why the final calculation looks so low in that really there is a ton of time that is personal not daycare.

I have been told you would do two calculations doing the daycare only rooms one way and the other shared rooms the percentage way.

I used all of my house for day care (except my two teenagers rooms). I have a two level house so the living room, dining room, kitchen and main level wash room are of course used all the time. I also use both my room and the guest room for napping. The guest room is fully for the use by day care so that's the one room which is 100%. The children also use the second level bathroom if someone else is in the main level wash room.

However - I was told that anything over 35% is looked into deeper when you are using your rooms for both business and family. (Different situation when you have dedicated space which is only ever day care).

This is how CRA explain it to me....

If 100% of your house is used for both family and business, then based on their calculation..

100% square footage x 12/24 (they said it's rare an in-home is open longer than 12 hours and so they would look harder at someone claiming to be open longer hours) x 5/7 (again they said it's rare an in-home carer is open on the weekends. So this is the max sq footage x the max expected hours x the usual business days per week = 35%

So someone open 5 days a week using 100% of their house who works 12 hours ends up being able to claim 35% tops.

The CRA agent I spoke with further explained that unless someone was operating out of an apartment or trailer, then it's not actually true that 100% of the space would be used. Built in closets are not used, on-suite bathrooms are rarely used, etc so anything over 35% when there's no dedicated space sends up a red flag.

My accountant said to count each room in the house , then count each room used for your dayhome and go by that percentage . I think I counted 15 "rooms" and used 8 for my dayhome .