work at home irs
Question about taxes concerning an in home daycare business?

I have been keeping kids in my home for the past 4 months. One full time and 3 part time. I am not licensed, if that makes any difference. The end of the year is coming up and I have to figure out what to do at tax time. Do clients normally ask for information, for example ss#, pertaining to tax reporting? I remember when I was a kid and my mother kept a little boy she ended up getting screwed by the mother because I think the woman reported it on her taxes. I can’t remember if the mother had used my mother’s ss# or not. Do I even have to report this income and will it help me receive a higher refund? I thought I’d ask here before I ask my FIL who works for the IRS.


As stated previously you should report all earned income and complete the Schedule C as part of your 1040 Individual Taxes on the form you will have your earned income as well as all expenses pertaining to your business. (some excellent examples are shown above)

Yes, clients do normally ask for your information, and even sometimes the total they have paid for the year. If you are going to be in business and do not want your social security number floating around out there I would suggest that you get a EIN number Empoyer Identifcation Number by filling out form SS-4 that you can get from www.irs.gov the number is free and it will protect your ss#.

An additional practice would be to have statements with all pertinent information ready for your clients at years end. Child Care Expenses is a deduction on the 1040 and most people want all the deductions they can this lowers the tax liability. If they are paying someone for those services they have the right to that information unfortunately or fortunately your ss# or EIN will be linked to that and yes you have to report or you will be penalized if you do not.

Much goes in to having a business it might be wise to do a little research because there are other items such as self employment taxes (paid at the end of the year on you tax return) that you will also be responsible for in reporting income.

Good Luck

Tax Tips: Home Office Deduction


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