How to Use This Book
Although filling out tax forms isn’t a pleasant task, it’s an essential part of operating a
family child care business. Many family child care providers don’t claim all the business
deductions they’re entitled to because they’re unaware of the tax rules and don’t think
the deductions are worth the time it takes to learn the tax rules. As a result, providers
end up paying more taxes than they need to. Taking advantage of all the legal business
deductions that you’re entitled to, however, ends up lowering your tax bill.
Because a family child care business requires you to use your home for business
purposes, the tax rules for your business are unlike those that apply to most other small
businesses. A professional tax adviser might not be familiar with all the details of the
tax laws as they apply to your business, which is why you need to take an active role in
learning the tax rules and what they mean for your business.
This book is designed to guide you through all aspects of preparing your taxes and
filling out your federal tax forms for the current year. (In most states, you will also have to
pay state income taxes, but there are no special state tax forms to file if you are a family
child care provider.) The Family Child Care Record-Keeping Guide provides additional
tax preparation information about how to keep good records and how to determine which
expenses are deductible.
Careful, accurate business records are an essential part of preparing your taxes;
when family child care providers get into trouble with the IRS, it’s usually because they
can’t separate their deductible business expenses from their nondeductible personal
expenses. These personal and business expenses are usually closely intertwined, and the
IRS requires you to have written evidence for all your business deductions.
This book provides you with two different approaches to preparing your taxes—the
Tax Organizer and the Tax Workbook—as well as copies of the common tax forms that
most providers need to file for their business.
The Tax Organizer
The Tax Organizer is a set of worksheets on which you can gather, calculate, and orga
nize all the information you need to fill out your tax forms. The Tax Organizer doesn’t
include a lot of explanation of the tax laws, but if you don’t have any unusual tax issues,
it can be a great way to gather all your data, thus making it much easier to complete your
tax forms. There are many ways you might use this section of the book. You might com
plete the Tax Organizer (referring to the Tax Workbook if you need more information
about a particular topic) and then transfer the information directly to your tax forms. You
might complete the Tax Organizer and then give the information to a professional tax preparer.
Or if you just need information on a particular tax form or topic (such as depreciation or
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