Home Daycare Tax Tips – Why You Must Know Business usage percentage for Form 8829


If you are the sole owner of which is to drive home the nursery business, you are eligible to take the home office deduction on Form 8829, Expenses for Business Use of Your Home. The starting point for this deduction is something called “business use percentage.” Read on to find out how to calculate this figure, and why is it so important to do it.

calculation. Here’s what you need to know to calculate the proportion of business use

1. Actual number of hours your home was used for the kindergarten year. If you offer daycare services for the same number of hours per week, this is an easy calculation. For example, if you make the nursery 8 hours a day, 5 days a week, that would be 40 hours a week. If you took two weeks for vacation, total annual Hours would be 50 weeks x 40 hours a total of 2,000 hours.

if the schedule is not fine, you should keep a ledger to record the actual number of hours that you do nursery every day, and then add up the time spent providing preschool services throughout the year.

2. Total hours your house was to be used for day care during the year. If you made a nursery for the entire year, you must use the default amount provided on Form 8829, which for 2008 was 8.784 hours (366 x 24).

Next, switch Item 1 Item 2 In the example above, that would be 2000 divided into 8.784, leading to the business use percentage of 22.77%.

The importance of the calculation. Why is it so important that you know this rate? Answer: because without it, you can not take a deduction for business use of your home. In our example, you would be allowed to reduce 22.77% of various home-related expenses listed on Form 8829, such as mortgage interest, property taxes, insurance, rent, repairs, maintenance and utilities. This is one of the best deductions available to you as a daycare provider, because you are facing personal expenses home legitimate business expense. Take advantage of this deduction. It can save you hundreds of dollars in taxes.


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