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DOUBLE TAP TO ZOOM WITH PHONE OR TABLET Preface I t has been over four years since I wrote the eighth edition of this book. Since that time, Congress and the Internal Revenue Service (IRS) have made many changes to tax rules that affect family child care providers. There have been changes in depreciation rules, adjust- ments to food and mileage rates, and clarifications on how to calculate the Time-Space per- centage. I have been involved in many IRS audits and have represented providers in several Tax Court cases over the past four years that have also clarified numerous rules. Further necessitating this ninth edition, the IRS issued two significant new rules in 2013. One allows providers to deduct in one year items costing $500 or less, if they prepare a prop- er statement for their records at the beginning of each year (see chapter 7). In addition, they added a new “Simplified Method” that allows providers to claim a certain amount of house expenses without any records. It sounds like a good deal, but most providers will not benefit by using this new rule. I explain this new rule in detail in chapter 6. Throughout this book I will make references to the IRS Child Care Provider Audit Technique Guide that was revised in 2009 ( &-Self-Employed/Child-Care-Provider-Audit-Technique-Guide). This publication helps IRS auditors better understand the issues that arise when auditing family child care providers. As with every edition of the Family Child Care Record-Keeping Guide, this book is specifically for those who care for children in their homes and get paid for it. Many child care provid- ers pay more in federal taxes than necessary because they don’t keep careful track of their expense deductions—either because they think it’s too much work or because they don’t know what expenses are deductible. This book addresses both problems by explaining record keeping in a simple manner and by identifying more than one thousand tax deductions. The information in this book applies to child care providers in every state, regardless of local regulations. If you pay close attention to the recommendations in this book, you will be able to claim the maximum allowable deductions and pay the lowest possible federal taxes. Please be aware that this book covers only federal tax rules; you should consult your state tax laws for additional regulations that may affect your business. COPYRIGHTED MATERIAL ix