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I've been a home care provider for 5 years now and wanted to add a few things that might help. Make sure you keep all receipts for anything you buy specifically for the child's care - special utensils, educational materials, safety equipment, etc. These are all deductible business expenses! Also, if you're using part of your home "regularly and exclusively" for the business, definitely track all associated costs. I deduct a percentage (based on square footage) of my utilities, internet, cleaning supplies, and even my homeowner's insurance. For mileage, get a dedicated log book and record EVERYTHING the day it happens - trying to recreate it later is a nightmare. And yes, transportation between work locations is absolutely deductible.
Thanks for the insights from your experience! Quick question - I have a play area set up that's pretty much only for the child during care hours, but my kids sometimes use it on weekends. Does that disqualify it from being "exclusively" for business?
That's a great question about the play area. The "exclusive use" test is pretty strict with the IRS. If your family uses the area on weekends, it technically wouldn't qualify for the home office deduction under the exclusive use requirement. However, there's a special rule for daycare providers that might apply to your situation. If you're a licensed care provider, you can still take the deduction even if the space is used for personal purposes during non-business hours. The deduction would be prorated based on both the percentage of your home used AND the time it's used for business. For example, if you use 20% of your home for 40 hours a week (out of 168 total hours), you'd multiply those percentages to get your business use percentage.
Has anyone tried using the QBO Self-Employed app for tracking all this stuff? I'm just starting out as a caregiver and feeling overwhelmed by all the tracking.
I use it and love it! You can track mileage automatically with the app - it uses GPS to log your trips and then you just swipe left for personal or right for business. Super easy to categorize expenses too - it connects to your bank account and credit cards. The quarterly tax estimate feature is worth the subscription alone.
This might seem like a dumb question but how do you actually report two W-2s on one tax return? Do you have to file separate forms or something? I'm also filing for the first time this year and have multiple jobs.
Thanks for the clear explanation! That helps a lot. I was worried I'd have to fill out twice as many forms or something. One more question - does having two jobs ever push you into a higher tax bracket and make you owe more?
You're welcome! And yes, having two jobs can potentially push your total income into a higher tax bracket. This is because tax brackets are based on your total income from all sources combined. For example, if your first job paid $20,000 and your second job paid $15,000, your total taxable income would be $35,000 (minus deductions). The tax system would calculate your taxes based on that combined amount, which might put some of your income into a higher bracket than if you only had one job.
Quick tip from someone who's been there: double check that both employers withheld enough taxes! When you work two jobs, sometimes neither job knows about the other, so they each withhold taxes as if that's your only income. But when combined, you might end up owing more. Happened to me my first year and I got hit with an unexpected tax bill :
This!!! My roommate just got slapped with a $900 tax bill because of this exact situation. Both her jobs were withholding taxes as if they were her only income, so not enough was taken out overall. Now she's scrambling to find the money to pay the IRS.
15 Don't forget about your state quarterly taxes too! Everyone's talking about federal, but depending on your state, you might need to make state estimated tax payments as well. I learned this the hard way last year with a surprise tax bill from my state.
2 Oh crap, I didn't even think about state taxes! Do they have the same deadlines as federal? And do all states require quarterly payments for freelancers?
15 Most states follow the federal quarterly tax deadlines, but not all of them. It really depends on where you live. Some states like Texas and Florida don't have income tax, so you wouldn't need to worry about state quarterly payments there. For states that do have income tax, you typically need to make quarterly payments if you expect to owe more than a certain amount for the year. The threshold varies by state - in California it's $500, in New York it's $300, etc. Your state's department of revenue website should have the specific requirements and forms.
4 Has anyone tried using TurboTax for quarterly payments? Their website says they can help calculate and pay quarterly taxes, but I'm not sure if it's worth the cost compared to just doing it directly through the IRS.
11 I used TurboTax Self-Employed last year. It does calculate your quarterly payments pretty well and reminds you of deadlines, but you still have to actually make the payments through the IRS systems. So you're basically paying TurboTax for the calculation service and reminders. Honestly, I switched to just using a free spreadsheet template I found online and setting calendar reminders. I save the TurboTax fee and just pay directly through IRS Direct Pay now.
Don't forget to check if your state has additional taxes for self-employment or small businesses! I'm in California and got hit with an $800 minimum franchise tax my first year even though I barely made any profit. TurboTax didn't even warn me about it until the end.
Wait seriously?? I just moved to California and started my business last year. Is this $800 tax for all business types or just certain ones? I'm a single-member LLC.
Yes, unfortunately California charges an $800 annual tax for LLCs, corporations, and partnerships regardless of whether you make a profit or not. Single-member LLCs are included. It's called the "minimum franchise tax" and it's basically the cost of doing business in California. If you're a sole proprietor (no formal business entity) then you don't have to pay it. But as soon as you form an LLC or corporation, you're on the hook for $800 annually. TurboTax should catch it during the state filing portion, but sometimes it's easy to miss if you're not looking for it.
Has anyone compared what TurboTax calculates with other tax software? I'm wondering if I'd get a different result with H&R Block or TaxAct. Sometimes the calculation engines handle self-employment taxes differently.
Sofia Morales
One thing nobody's mentioned yet - if you're working while in school, check if you qualify for the Earned Income Tax Credit. Even as a student with part-time income, you might be eligible if your income is below certain thresholds. Also, look into whether your state offers any additional education deductions or credits. Some states have their own education benefits that are separate from federal ones.
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Zoe Papanikolaou
β’Can I get the Earned Income Credit if my parents still claim me as a dependent though? And how do I find out what my state offers for students specifically?
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Sofia Morales
β’You generally can't claim the Earned Income Credit if someone can claim you as a dependent, so that would rule you out if your parents are claiming you. For state-specific education benefits, just search "[your state] education tax credits" or check your state's department of revenue website. Most states have a dedicated section for education-related tax benefits. Some states like Minnesota, Wisconsin, and New York have fairly generous education deductions or credits even beyond what's available federally.
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Dmitry Popov
Just FYI, I made a mistake my freshman year by not keeping receipts for my textbooks and required materials. Make sure you're saving ALL receipts for anything education-related, and get documentation from your department that the laptop and software were required for your program. That documentation can make a huge difference if there's ever a question about whether those were qualified education expenses!
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Ava Garcia
β’This is true! I work at a university financial aid office, and we always tell students to keep all receipts and even emails/syllabus pages that show requirements. The IRS can be picky about what counts as a "required" educational expense vs. a personal preference.
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