The 2025 tax season is upon us. Do you wish you had kept better business records last year? It’s not too late to review your income and expenses to file your taxes more accurately!
Gather Available Financial Information
- Collect bank statements for the whole year.
- Look for and highlight parent payments and other deposits for child care income (checks, cash deposits, apps like PayPal, Venmo or Cash App).
- Find and print/save all tax statements such as 1099 forms from DCY, OCCRRA, 4C for Children and others, as applicable
Create Income Records
- Review parent contracts or attendance records to make a list of all children enrolled.
- Check text messages, emails or payment apps for payment history.
- List weekly or monthly tuition amounts received for each child in your care last year.
- List any grants, reimbursements or other donations received.
Summarize Expense Records
- Review your financial statements for child care related purchases.
- Look for expenses such as:
- Food and snacks for the business only
- Toys, books and learning supplies
- Cleaning and paper supplies
- Utilities (electric, gas, water, internet)
- Insurance and housing expenses
- Training and membership fees
- Wages paid to employees
Family Child Care Providers: Track Home Use for Business
- Calculate hours the home was used for child care and hours at the home spent cleaning, training and recordkeeping for the businesss.
- Count the days the business was open with children in care. Do not count days the business was closed due to vacation, sickness, professional development or emergencies.
- Make a sketch of your home floor plan for each level. Measure rooms used for child care (time-space percentage) and mark them “used only for child care” or “space shared with personal use.” Be sure to include areas used for child care storage as well.
Transportation and Meals
- Review calendars or attendance for days children were present.
- Calculate miles driven for child care errands.
- Count all meals and snacks served to children.
Organize and Explain
- Group income and expenses into clear categories.
- Write notes explaining how each expense was used for child care.
- Keep all recreated records in one folder (paper or digital.
Find Assistance
- Interview and select a tax professional familiar with home child care. Be sure they understand the importance of an accurate time-space percentage for your home business.
- Ask your tax professional any questions you have about common expenses and allowed deductions.
Disclaimer: 4C for Children’s coaches and trainers are not tax professionals and do not provide legal or financial advice. Consult a trusted professional for questions and further guidance.