[PamalaLauren]

Starting in August I'm going to be providing day care for my neice who will be about 2 months old.

I've found a double stroller and am buying it tomorrow as a matter of fact and then I'm making up the contract for the day care.

I'm sort of worried about the whole thing but I think overall I'll get used to it and it will be extra cash flow into the household so that's always a plus. The main thing is working out my taxes. But I'll figure that out.

[mcmama]

Are you looking at just your niece, or eventually taking in more kids? I did this for 9 years. It was great. You are smart to do a contract, many people do not do this for relatives and then all sorts of misunderstandings happen.

There are great tax benefits for doing this, because you can claim more than a home office - there is a whole formula for computing a percentage that when I was doing this could be applied to utilities and other household expenses. There are some books on the business end of this by Tom Copeland, and Redleaf press may have others as well.

[twinzplus3]

I highly recommend Turbo Tax for home and business. I always do my taxes with turbo tax and they have gotten consistenly more complicated. It is cheaper than going to a real person too.

[PamalaLauren]

Yeah I'm so happy with Turbo Tax. I tried just looking up how to caculate taxes on my own and I was lost. Turbo Tax makes things so easy.

But I only plan on doing my neice for now. I may chose to do more later on but for now it's just her. It may be long term as well so we'll see what happens with it.

[simplesahm]

If you decide to take on more children, I would highly recommend hiring someone to do your taxes. It will cost you more upfront, but you will probably make up more than the difference in the long run.

My father-in-law is an accountant and when he started doing my taxes for me, my return doubled!

[mcmama]

I do my taxes myself too, with turbo tax. But I have worked as a bookkeeper, and no longer do family child care.

Get the books I recommended, and look for tax advice specific to childcare in your home. I found a lot of accountants really mess up the formula for business use of your home in child care, and that they often do not understand what income is taxable and what is not.

My county resource and referral agency used to have me do some training of new providers. I remember that they had an accountant from the local CPA professional association come to talk about taxes. Turns out that the senior child care providers knew more than he did about what was specific to our business. We told him that reimbursements from the child care food program were taxable income when he said they were not. We told him that the expense of providing the food was deductible. We told him the correct formula for calculating business use of a child care home (much clearer now, I think they have it right on the tax form and Turbo tax asks this in its questions too.) He knew about schedule C and hiring your own children, and payroll for helpers, but little else specific to the reality of family child care homes.

It's best to be knowledgeable if you do your own taxes. I think it would be worth it to consult a pro, at least for starters, if they know your business and how the use of your home is different from having an office in your home. You can also get information directly on the IRS website.