I've basically filled out the schedule C for my wife's home day care business
(sole proprietorship) with 2 exceptions, both relating to depreciation. We
bought a van (used) for transporting children that is always used in the
transport of children unless I'm going out to gas it up. Not a lot of miles
put on it, so I know it's in our best interest to take a depreciation expense
on it.
I thought about a section 179 depreciation, but I'm worried that will cost us
more in the long run. Between us, we earn roughly $125,000 a year and have
high dollar amounts in itemized deduction mostly from mortgage interest (I
don't know when the AMT will rear its ugly head on us).
The other is house depreciation. I understand we can expense it, but it will
decrease our basis in the house. Is this in our best interest?
Thanks in advance for any help you may provide.
The IRS has recently issued regulations dealing with home businesses. For
ordinary utility expenses. IRS publication 587 which you can obtain onlline
at IRS.gov. should help clear up some of your questions. One important thing
to remember any business deduction related to your home:that part of your
home you wish to expense MUST HAVE EXCLUSIVE BUSINESS USE AND ZERO PERSONAL
USE. Publication 587 also outlines special rules for Home day care providers.
If you do not wish to keep detailed records EXCEPT a required mileage log use
the standard mileage rate which includes depreciation.
The IRS has recently issued regulations dealing with home businesses. For ordinary utility expenses. IRS publication 587 which you can obtain onlline at IRS.gov. should help clear up some of your questions. One important thing to remember any business deduction related to your home:that part of your home you wish to expense MUST HAVE EXCLUSIVE BUSINESS USE AND ZERO PERSONAL USE. Publication 587 also outlines special rules for Home day care providers.
If you do not wish to keep detailed records EXCEPT a required mileage log use the standard mileage rate which includes depreciation.
I beg to differ, but thanks for your input. The rules for home day care are
that you have to figure the percentage of the floor space used and then
multiply by the percentage of hours that you use the home space for business
purposes. So, if we use 50% of our house for the business and are open 40% of
the time, we get to deduct 20% of our expenses.
kmurray | Community Moderator |
2/13/2013 - 3:23 pm
Hi, With such specific questions, it'd probably be best to talk to an expert. Have you considered contactng one of SBA resource partners: SCORE, Small Business Development Centers or Women’s Business Centers.These organizations provide free business counseling and training. To find your nearest SBA resource partner, enter your zip code in our local assistance guide. Good luck!
Hi, With such specific questions, it'd probably be best to talk to an expert. Have you considered contactng one of SBA resource partners: SCORE, Small Business Development Centers or Women’s Business Centers.These organizations provide free business counseling and training. To find your nearest SBA resource partner, enter your zip code in our local assistance guide. Good luck!
Thanks, I'll have to give it a try. I know the tax rules fairly well, I've
done taxes professionally in the past. I'm thinking my best course of action
is to prepare estimates of my tax returns for the next 5 years and see which
works out better in the long run.
targetmgt | Window Shopper | 2/17/2013 - 11:32 am
ordinary utility expenses. IRS publication 587 which you can obtain onlline
at IRS.gov. should help clear up some of your questions. One important thing
to remember any business deduction related to your home:that part of your
home you wish to expense MUST HAVE EXCLUSIVE BUSINESS USE AND ZERO PERSONAL
USE. Publication 587 also outlines special rules for Home day care providers.
If you do not wish to keep detailed records EXCEPT a required mileage log use
the standard mileage rate which includes depreciation.
BobF | Window Shopper | 3/2/2013 - 4:20 pm
that you have to figure the percentage of the floor space used and then
multiply by the percentage of hours that you use the home space for business
purposes. So, if we use 50% of our house for the business and are open 40% of
the time, we get to deduct 20% of our expenses.
kmurray | Community Moderator | 2/13/2013 - 3:23 pm
BobF | Window Shopper | 3/2/2013 - 4:21 pm
done taxes professionally in the past. I'm thinking my best course of action
is to prepare estimates of my tax returns for the next 5 years and see which
works out better in the long run.
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