Daycare Tax Tips

Why Don't You Ask for Outside Space Measurements?

The space percentage counts inside space only

A child care provider writes:

> In your child care tax return checklist and packet it says to take home space measurements, NOT outside measurements. Everyone I know in child care measures and deducts based on both inside and outside space used for child care. I was wondering why you do not ask for the outside information? We have a large backyard with a nice play structure, sandbox, water tables, patio area, etc., and the kids use that outside space just as much as the indoor space. It seems such waste to not ask to claim that space for child care. Just wondering why you do not deduct it???? Please let me know if I am misunderstanding something.

This is a fairly common misunderstanding. The space measurements are used to calculate your time/space percentage. This percentage determines how much of your home expenses, such as rent or mortgage interest, utilities, building depreciation, etc., you can deduct as a business expense. It is meant to indicate the percentage of your home that is used for business purposes and that means the structure only. Yard space does not affect your time/space percentage.

It is quite true that many providers have large yards and many are outside with children a great deal. Unfortunately, though this is the case, the size of your yard does not affect your time/space percentage and does not need to be measured. A deck that is part of the structure of a home can be measured and counted as part of the home square footage, but you can't count yard or patio space.

I have seen family child care tax returns with all manner of errors over the years, but I actually have never seen anyone count the yard space as part of their square footage. (Though I am sure there are those who have done it.) Square footage means the building only.

Hopefully this will make sense to you. Time spent in the yard will certainly factor into your total hours worked and affect your time/space percentage that way.

Finally, I always refer to Tom Copeland's Family Child Care Record-Keeping Guide for guidance. In Chapter Three, he writes: "Don't include your lawn, driveway, sidewalk, outdoor play areas, garden, or patio" part of your home space.

Last updated 19 May 2011

Posted on 2010-02-22 02:55:54