Posted by Jim McClaflin, EA, NTPI Fellow

Deductions for Your Daycare

Deductions for Your Daycare

Running a daycare out of your home is a big deal. You are going to be in charge of raising and perhaps educating the children of your clients. This is a rewarding career, but can take a lot of time and effort to accomplish. Running after children all day, making sure they are fed, keeping your home clean, and providing them with all the care and love that their parents are expecting can seem almost impossible.

Not only do you need to take care of the children during the day, but you are also responsible for paying for some of the equipment and toys that you will use at the in home daycare and keeping track of payments, billing, and expenses for when tax season comes around. It doesn’t take long for all this paperwork to creep up on you and make you feel overwhelmed. When you are running your own in home daycare, make sure to call in the professionals with Accounting and Tax Professionals to help you keep it all in order throughout the year.

Common  and Necessary

Regardless of which industry you are in, you will be able to make some claims for the business as long as they are necessary and common. If one or both of these are not included in the purchase of an item for the business, you will not be able to claim it. When it comes to common expenses, these are ones that others who work in the same industry are going to need in order to conduct business. For example, an in home daycare is going to need toys, books, and perhaps some food, even though these are not always seen as business expenses. You won’t be able to claim that cruise ship vacation because that is not a common expense, has nothing to do with your business, and wasn’t really necessary.

Home  Office

The space that you use to take care of children in your in home daycare can be counted as your home office. This can potentially save you a lot of money when it comes to your taxes. To figure out this deduction, you will need to figure out the total square footage of your home and then figure out how much is used just for the daycare operations. You can use the main playrooms, bathrooms, bedrooms if you do naptimes, and the kitchen if you prepare snacks and meals there. If you are uncertain about how to do this process or you want to make sure that you are calculating the home office space correctly, make sure to contact the professionals at Accounting and Tax Professionals to help you get this deduction properly each time.


As a daycare provider out of your home, there is a lot of different equipment that you will need to purchase to keep the children entertained and safe. If you need to have a computer and other software to keep billing and payments in order, you may be able to deduct those as well as the extra equipment you purchase such as baby proofing items, infant swings, cribs, high chairs, first aid kits, food, wipes, diapers, and more. This can really help to offset some of the costs that you are incurring in this line of business and can take some of the burden from you. To learn whether you are able to deduct something as an expense, make sure to contact us at Accounting and Tax Professionals to get your taxes done right.

Children’s  Entertainment

During your role, you are going to have to play many hats. You will not only entertain the children, but often you will need to help educate them and keep them otherwise occupied. Some of the expenses that you incur for doing these things can be deducted during tax season. Things such as slides and jungle gyms if you install them outside, activity mats, games, books, and toys can all be used in this deduction to help offset some of the costs you have during your job. If you take the kids on any educational trips you may be able to offset some of these costs on your tax return as well.


If you are going to deduct any of these expenses on your tax return, make sure that you have the proper receipts and other documentation in place to prove that you actually made these purchases. Never claim something that was not related to your business or which you don’t have a receipt for to prove that you made the purchase and how much the original purchase was for. Our professionals at Accounting and Tax professionals can take a look at your expenses and help you to keep them all in order in case of an audit on your business. When everything is in order, you don’t have to worry about anything bad happening and you can concentrate fully on your business and taking care of those kids.

Running your own in home daycare is a big deal. It’s a great way to make money from home and spend time doing the things that you love. When you are ready to fill out your tax return for your in home daycare, make sure to contact Jim McClaflin with Accounting and Tax Professionals in Grimes, IA. We can take care of all your tax return needs whether you are running an in home daycare or need help with your other self-employment needs.

Jim McClaflin, EA, NTPI Fellow
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