April 15th, TAX DAY, is t-minus 1 month out and the crew at MyVillage wants to share some tips for getting your finances in order and helping you file your taxes accurately and on time. Running your own in-home daycare business comes with a whole host of tricky tax benefits, and so we wanted to share a few strategies and tips to make doing your taxes as simple as possible. The ultimate goal: maximize your income and minimize the costs of your in-home child care program. Remember – we are not tax advisors, so please consult an accountant or tax attorney if you have specific questions
Tip #1: Record Keeping is the secret sauce
This is it. The big kahuna, the top secret, special sauce to getting your taxes filed accurately and with relative ease. Record keeping is the most important part of maximizing your take home pay as an in-home childcare provider. When running an in-home childcare education business, there are so many expenses that you will encounter. Luckily, a lot of federal and state tax policy lets educators and business owners write off expenses, as long as they have a record of which expenses they are writing off. Keeping accurate records will ensure that you can maximize your deductions and save as much money in the tax process as possible. Make record keeping a constant practice that you build into your business management strategy. It’s recommended that you use scanner apps to save your receipts and bills in electronic form so that you can quickly and easily track your in-home childcare education expenses. We’ve listed a few below that are quality options, but feel free to look into other methods as well. The important thing is that you find a method that you will use for everything related to your in-home childcare education business.
Scanner App Options:
Tip #2: File on time
This one is probably pretty obvious, but even if you owe an amount larger than what you can afford come tax day it’s still important to file on time! Pay as much as you can in order to avoid a late filing penalty and to minimize interest charges on any unpaid balance. If needed, definitely utilize a tax extension form in this process. Using a tax extension will give you extra time to prepare and file your tax return, so DO IT! Procrastination is a bad idea here, so use the extra time wisely to figure out how you are going to file your return and pay any taxes owed (if necessary). Taking these steps will ensure that your in-home child care business won’t incur any crazy filing penalties, which can be super expensive and inconvenient.
Tip #3: Review last year’s tax returns
For those of you who are new to the MyVillage biz, reviewing last year’s tax returns will help you determine what is still the same for you and your family this year and what has changed with the start of your new in-home childcare program. Reviewing information from last year’s federal and state tax returns will make the current year’s filing MUCH easier, since most of the information will be the same.
Tip #4: Remember your state taxes!
Most states require a separate state tax return to be filed. If you are using an electronic filing software, this should be built in for you. If you are filing on your own, without software, make sure to double check that you have the right forms for you and your family and for your in-home childcare program.
Tip #5: Keep all tax documents/tax return copies for at least 3 years.
You’ve finished your taxes, and you are ready to file or e-file. But wait! Remember tip #1, the big kahuna, the secret sauce to successful in-home childcare programs and tax season! Keep a record of your documents. Make copies of your signed returns, schedules, and other tax documentation. This helps to ensure that if there are any questions about your return, it’s really easy to follow up and provide any requested documentation.