IF YOU RUN A HOME DAYCARE WHAT IS THE BENEFIT OF CLAIMING THE MONEY MADE?

Question

i NEED TO KNOW HOW THAT WILL HELP/HURT ME?

Answer 1

If you're making less than $600 per year from each of your clients - Congratulations (sort of)! You don't need to report it.

But, if you are making $600 or more from any of your clients, it's usually a good idea to report it for the following reasons:

1. Verifiable income: if you wanted to get a mortgage or any other loan, or if you want to boost your credit rating, filing a tax return on your home-based business is really important. Especially now that so many lenders have had problems with "no-document" loans, if you can show them verified proof you're making money, that's a very good thing.

2. Deductions: If you want to claim deductions related to your business, you also have to declare the income. Depending on your set up, you may be able to deduct a portion of your mortgage or rent, phone bills, internet, any money you've paid for advertising (printing flyers, running a classified ad), travel (if you pick the kids up), supplies (paint, crayons, blankets, groceries, etc.), and any money you might pay other people to help you out... It's as easy as holding on to receipts or just getting a credit card that you use only for daycare-related items. When the end of the year comes, either look at all your credit card statements and/or receipts, total them up, and there's likely to be a BIG portion of that you can deduct, which offsets whatever income you'll be claiming. In fact, it's not unusual for your business to have "lost" money on paper even though you didn't feel the pinch of going hungry.

Answer 2

The benefit is that you won't go to jail for tax evasion.

A home day care is a business. You must report all income and expenses associated with a business.