Preparing for daycare in my home & tax deductions?
In Illinois, I understand that one must be a licensed daycare in order to claim tax deductions for the business. I intend to become licensed within th...
In Illinois, I understand that one must be a licensed daycare in order to claim tax deductions for the business. I intend to become licensed within the next few months.
In the meantime, I will need to make some major purchases & renovations to my playroom area before I get inspected for my license. Can I still claim these purchases as deductions, since they will have taken place before I got my license? Any thoughts or suggestions are appreciated. Thanks…
The expenses you incur before you open the business will fall into 3 categories.
1. Capital improvements. These add to the basis of your home. Your basis is used to calculate depreciation and is not immediately deductible.
2. Repairs to your home. Not deductible anywhere.
3. Fees and expenses that you would be able to deduct once you are open for business. These are start up expenses. Up to $5000 can be deducted when you open, the rest is capitalized.