- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Home based daycare tax question
Posted on 9/1/16 at 8:55 pm
Posted on 9/1/16 at 8:55 pm
So my wife is thinking about quiting her current job and doing childcare in our home. I have talked to someone that does this and they say that they typically show a loss or minimal profit each year. Since she would be giving up her current income and then only show a minimal profit or loss, would our taxes be based mostly on my income and how much I pay in?
*I know that my best bet is too ask my tax professional, but I called today and he is out till Tuesday.
*I know that my best bet is too ask my tax professional, but I called today and he is out till Tuesday.
Posted on 9/1/16 at 9:40 pm to hugo
Yes, mostly just your income. You would pay self employment tax (which is higher since you pay full SS and Medicare amounts with that) on any profits she makes. I have some self employment income. Legally I could show a loss and explain with receipts (home office, Internet, phone, mileage, etc.) but I get nervous reporting a loss. I don't want to raise any red flags so I claim a bit of profit. Not sure what actually causes red flags but I figure consistent losses probably do. So many years of losses and I believe the IRS can declare your business as a hobby (depending on what it is).
Posted on 9/2/16 at 7:03 am to hugo
Is there a reason why she has to take a loss?
Our son's home daycare lady told us she averaged $44k/year over the past 5 years. Taxes take a big chunk of that, but what job is safe from taxes taking a big chunk?
She didn't have very many licenses or fees to deal with, and she said she was surprised at how small the insurance was as long as she kept up with DHR regulations.
Our son's home daycare lady told us she averaged $44k/year over the past 5 years. Taxes take a big chunk of that, but what job is safe from taxes taking a big chunk?
She didn't have very many licenses or fees to deal with, and she said she was surprised at how small the insurance was as long as she kept up with DHR regulations.
Posted on 9/2/16 at 8:47 am to hugo
quote:
I have talked to someone that does this and they say that they typically show a loss or minimal profit each year.
While you should certainly write off legitimate expenses, if you economic situation gets too far away from your tax situation (i.e. you are making a bunch of money to live off of, yet showing a loss for taxes each year) that is where people get in trouble on audit.
Just be careful here.
Posted on 9/2/16 at 9:24 am to hugo
quote:The rules and regulations for operating a daycare facility are not enforced too rigorously by the state. However, if you have a child get hurt while under your care and you are out of compliance with a rule or regulation you will be at considerable risk. Before you go into business as a daycare operator get legal assistance. Asset protection and risk management issues need to be analyzed with the same care as financial and tax matters.
I know that my best bet is too ask my tax professional, but I called today and he is out till Tuesday.
Posted on 9/2/16 at 10:15 am to StringedInstruments
quote:
Is there a reason why she has to take a loss?
Probably cause she doesn't want to pay a lot of taxes. Or any. Many people take losses but aren't actually losing. Wife's friend tried to talk her into selling make-up or skin care or something like that. She was bragging how my wife could write off make-up, hair appointments, massages, manicures, etc., until she wouldn't owe any taxes (on the basis that "your image is part of your brand when you sell these products"). No way am I taking that risk with the IRS. I've noticed a lot of successful people I know selling these products on Facebook and I feel like Uncle Sam is probably the reason. No way do people making $80k a year at a professional job need to sell tubes of lipstick on weekends to pay their bills.
Posted on 9/2/16 at 11:00 am to cfa626
quote:
Probably cause she doesn't want to pay a lot of taxes. Or any. Many people take losses but aren't actually losing. Wife's friend tried to talk her into selling make-up or skin care or something like that. She was bragging how my wife could write off make-up, hair appointments, massages, manicures, etc., until she wouldn't owe any taxes (on the basis that "your image is part of your brand when you sell these products"). No way am I taking that risk with the IRS. I've noticed a lot of successful people I know selling these products on Facebook and I feel like Uncle Sam is probably the reason. No way do people making $80k a year at a professional job need to sell tubes of lipstick on weekends to pay their bills.
Interesting. I've wondered how some of that evens out though.
When I was self-employed as a musician, I watched Uncle Sam gut my income even with some deductions. I never understood how musicians I knew could afford to buy a few new guitars, gear, and other shite that cost a lot of money. I guess it was a similar deal with avoiding paying too much income tax.
Posted on 9/2/16 at 11:37 am to StringedInstruments
quote:
When I was self-employed as a musician, I watched Uncle Sam gut my income even with some deductions. I never understood how musicians I knew could afford to buy a few new guitars, gear, and other shite that cost a lot of money. I guess it was a similar deal with avoiding paying too much income tax.
I know a doctor who loves to travel worldwide. He usually posts pics of all of his travels. Before long, he announced that he now has a photography "business" and said "May as well make some money off of this expensive hobby." He posts all of his pics online with small watermarks in the corner and says to contact him if you want to order. Now what are the odds that he's not writing off his plane tickets, lodging, etc., on these trips he takes and reporting a loss? I'd say slim.
Popular
Back to top
Follow TigerDroppings for LSU Football News