This is a transcript of the Q&A held during a KidKare Accounting webinar with Tom Copeland. It has been edited to flow better in a text format.
Click the links below to jump to a specific section.
Q: How do I roll over to KidKare.
A: Just start going to kidkare.com to record your claim instead of the old way.
Q: Will my sponsor be able to see my accounting reports?
A: No. Sponsors only have access to view food program related data.
Q: Can I edit an invoice? If so, how?
Unpaid and Draft status invoices can be edited. To edit an unpaid invoice, open KidKare and go to Accounting > Invoices. Select an unpaid invoice from the list. Hit the pencil icon at the top of the screen to edit it. Deleted, Paid, Partially-Paid invoices CANNOT be edited.
Q: Can I print a parent invoice?
A: Yes. Go to Accounting > Invoices. Select an invoice. Hit the printer icon at the top of the screen.
Q: How do I add more than one child on an invoice?
Q: Can you print out a statement of an account or parent payment?
To print an account statement go to Reports > Accounting Reports > Statement of Account. Select the payer and time period you wish to view and hit the Run button. If you want to actually print the report out on paper, you can collapse the header (hit the arrow at the top right of the screen), then hit the printer icon (just above the first column onscreen).
You can also print a receipt, which is actually just printing a Paid invoice. The paid invoice will show the rate, the payment, and that the balance has been paid.
Q: Can I create a zero dollar invoice when I’m not applying a late fee that is in my contract?
A: Yes. Enter the normal late fee in the rate field. Then enter the same amount in the Discount field. The discount will zero out the rate.
Q: Is my tax id number on parent invoices?
A: Not at this time, but this is a change that we hope to make very soon.
Q: On Minute Menu, if a parent overpays they get a credit, but not on KidKare. True?
A: Not true. Click here to learn more about credits in KidKare.
Q: Can I record the parent’s check number on their paid invoice?
A: Yes. When recording a payment, select the check option, and you'll see a field to add the check number.
Q: When a parent signs out and then stays and talks longer, how do we include that in our logging time for T/S%?
A: You can go back to the Check IN/Out and push the OUT button again and it will record the later time. If you forget to do this that day, you can always go back later and enter the actual time the parent left by adjusting the OUT button time.
Q: Please speak about what the yearly operation button is for?
A: You want to keep track of all the hours you home is used for your business. The more hours you record, the higher your time-space% and the lower your taxes. You can either use the hours reflected by your daily attendance records, or your hours of operation. Attendance records are more accurate that your hours of operation. However, the hours of operation feature is currently not working properly in KidKare and will be fixed this fall. So, for now use the attendance records.
Q: Do we need to IN/OUT child's time and meal attendance to get credit?
A: You track the hours you are using your home for your business you need to enter the IN/Out times for each child. This is important to track for your time-space% calculation. You want to enter daily meal records to show what meals and snacks each child was served each day, so they will appear on the Standard Meal Allowance Report so you will know how much you can deduct for food expenses using the Standard Meal Allowance method.
Q: Will the hours of operation be fixed in time for tax time?
Q: Why don’t we use the whole house?
A: As part of the time-space% calculation, you should look at each room in your home and determine if it’s regularly used for your business. Regular use means 2-3 times per week for some business activity. Children don’t have to be in the room for it to be considered regular use. Most providers are using the vast majority of their rooms on a regular basis. Many are using all of their rooms on a regular basis.
Q: if you have the Redleaf Calendar Keeper and have been keeping track of all this from January and you have the hours of operation can I edit it?
A: If you have been keeping track of all the hours you use your home for business purposes outside of KidKare, you can certainly use those records as part of your time-space% calculation. You can either enter these total hours into KidKare, or add them on a separate piece of paper when doing your taxes.
Q: What if we just built our extension for the childcare use only. How do you add that to the T/S because it was done in the middle of the year?
A: If you only use the extension for your business, you can count 100% of the cost and depreciate it as a home improvement over 39 years. You could claim half of this depreciation in the first year. If it cost less than $10,000 you may be able to use the Safe Harbor for Small Taxpayers rule and deduct it in one year. You could also count all of the time spent building the extension as part of your time-space % calculation.
Q: What is the actual business expense compared to the others?
A: In general, if you use an item for both business and personal purposes, choose the time-space% option. However, if your actual business use of a particular item is much higher than your time-space% and costs at least a few hundred dollars, you may be better off choosing the actual business use % option. If you choose this option, you’ll need to keep a separate record, outside of KidKare, tracking your business and personal use for a couple of months.
Q: Can cleaning supplies still be claimed at 50%?
A: There is no rule that lets you automatically claim 50% of cleaning supplies or any other expense. When an item is used for both business and personal purposes, use your time-space%.
Q: My time/space doesn't change much and goes down instead of up. why?
A: That’s because KidKare tracks hours for the year each day. When you are closed on Saturday and Sunday, KidKare counts these 48 hours as part of the year, but because you weren't caring for children you aren’t using your home for business purposes and thus your time-space % will go down slightly. It evens out at the end of the year.
Q: Do you count time-space% if your home is being used for care by substitutes?
A: Yes! You don’t have to be doing work in your home for you to be able to count hours in your time-space % calculation. Hours spent by your substitute while you are gone or are sleeping do count towards the business use of your home.
Q: Is mowing your lawn count as time in the time-space % calculation?
A: No, because you can only count time spent on activities that you wouldn't otherwise be doing if you weren't in business. Since you would still mow your lawn if you weren't in business, you can’t count this time. Time spent shoveling snow at 5am would count because you wouldn't be doing this at 5am if you weren't in business.
Q: If the grass needs to be cut so your daycare kids can play in that area, can I count the time?
A: No. You would still be mowing this area even if you weren't in business.
Q: Can I count the time and cost of playground upkeep and mulch and weeding?
A: I’d count the time for playground upkeep and mulching, if you wouldn’t be doing this if you weren’t in business. I wouldn’t count weeding time.
Q: Why would you use the time space percentage on the mulch in the playground, if you put it down because of the playground safety?
A: You can deduct the time-space % of the cost of the mulch if your own children used the playground. If you don’t have children of your own using the playground, count 100% of the cost of the mulch.
Q: My son in law takes care of my lawn. How does that work?
A: If you pay your son in law you could deduct the time-space% of what you paid him. He would have to report it as income.
Q: Can you count time for painting walls or assembling items?
A: Don’t count time spent on general household chores you would do even if you weren’t in business. However, if you are painting walls more often because of your business, count some of this time. If you are assembling items used solely for your business, count all of the time. If you are assembling general household items, don’t count any of the time.
Q: How do you count time on an addition we finished for the daycare?
A: If you only use the addition for your business, count all of the time. Otherwise, don’t count any of the time.
Q: How much time is too much time per day to clean 1-1/2 hours?
A: You can count all the hours you spend cleaning your home for business purposes. You can count all the time you are cleaning just before the children arrive and just after they leave. If you are cleaning in the evenings and weekends areas that are used for business and personal purposes (kitchen, living room, etc) don’t count all of your cleaning time. One and a half hours a day for cleaning is not unusual.
Q: Can I count the time I spend cleaning my home?
A: You can count the time spent cleaning that is related to your business. This includes time spent just before children arrive and just after they leave. If you spent 2 hours on Saturday cleaning areas that are used for both business and personal purposes (kitchen, bathrooms, living room, etc.), don’t count all of this time. Depending on how many daycare children and how large your family is, count some of the time.
Q: Can I count the space of two outdoor sheds?
A: Probably not. If they are not permanently attached to the land, don’t count them. If they are small sheds, don’t count them. If they are large sheds, or barns, count them. If you do count them you’ll have to pay taxes on the profit associated with selling them when your home is sold.
Q: Should I count my garage as part of the square footage of my home?
A: Yes! IRS rules say that a garage (even if detached) and your basement are considered part of your home and must be counted. Most providers use their garage and basements on a regularly basis for their business and thus can count the space as business space. These areas can be counted even if day care children are not allowed in them.
Q: We built a deck and spent $2,500 on materials. Can we count the time building the deck?
A: No. You can only count time if you would not be doing the work if you weren’t in business.
Q: Can you go back in and add them for the year, or not. I’ve been using the program for a couple of months but not this feature, and I would like to.
A: You can always go back and add expenses into KidKare later in the year.
Q: Can I go back and add my expenses from the beginning of the year?
Q: If you have several items that are under $2,500 you cannot depreciate them?
A: Under new rules, you don’t have to depreciate any individual item that costs less than $2,500. So, don’t enter such items into KidKare under the headings: Computer Software, ComputerFurniture/Appliances, Home Improvement or Land Improvement
Q: I recently had storm damage. how do I record the repairs? Tree fell on my home so roof repair, gazebo ruined and clothes line was also smashed. do I only record my deductible?
A: You can’t deduct any expense that is covered by your insurance. You can deduct expenses not covered by insurance as a casualty loss. See my website (www.tomcopelanblog.com) for an article about this (search “casualty loss”).
Q: My group daycare is not in my home so am I able to deduct all expenses?
A: Yes, assuming you don’t use this other location for any personal purposes.
Q: Can you claim membership fees in Costco?
A: Not for a general Costco membership. That’s because club dues are not deductible. If you buy a business membership in Costco that would be deductible.
Q: What are the depreciation expense categories we should only use when purchasing items costing more than $2,500?
A: The following expense categories should only be used for items costing individually more than $2,500:
If you bought a couch for $1,000, enter this under an expense category such as Household Items.
Q: How do I deduct my monthly mortgage payment when it includes home insurance that I pay in escrow to the bank?
A: You will get a statement at the end of the year that says how much you paid in mortgage interest and house insurance. Enter these numbers into KidKare and apply your time-space%. You will depreciate your home to capture your principal payments. Don’t enter your monthly mortgage payment into KidKare.
Q: If I depreciate a home improvement over 39 years, but don’t stay in business for 39 years, what happens?
A: You won’t get the extra years of depreciation you weren’t able to claim.
Q: How do I deduct siding, windows, new fence, furnace replacement, new roof shingles?
A: There have been significant rule changes regarding depreciation over the past fee years. In all cases, they benefit providers. A quick summary:
Any expense that costs less than $2,500 can be deducted in one year.
Roof shingles can be treated as a repair and deducted in one year.
A new fence is depreciated over 15 years, but you can use the 50% bonus depreciation rule and claim half the depreciation in one year.
New siding and new furnace must be depreciated as a home improvement over 39 years, but you can use the 50% bonus depreciation rule and claim half the depreciation in one year.
See my annual Family Child Care Tax Workbook and Organizer or my website (www.tomcopelandblog.com) for details.
Q: Can I enter expenses from earlier in the year?
Q: Can I create custom expense categories?
A: Yes. After selecting an expense category, type over it you new expense category.
Q: Can you enter Form 8829 expenses by the year instead of by the month?
A: Yes! You can enter expenses at any time. You can total your utility expenses, for example, on a separate piece of paper and enter one amount for the year into KidKare.
Q: How do I enter meals if I’m not on the Food Program?
A: The same way. Enter your meal counts for each child, for each day. They will get totaled on the Standard Meal Allowance report.
Q: If I spend the night at a hotel to be able to attend a training, can I deduct this cost and where do I enter it?
A: If the primary purpose of your trip is for your business, you can count the cost of the hotel. Enter it under Travel and Entertainment.
Q: Can I deduct meals when I’m away from home to take a training class?
A: If you are spending time overnight to attend a training you can deduct your food expenses using either a federal per diem rate (https://www.gsa.gov/travel/plan-book/per-diem-rates) or keep food receipts. In either case, divide the amount you get by 2 to determine your deduction.
Q: If I buy coffee or pop at a training, can I deduct it?
A: You can only deduct a business meal if the primary purpose of the meal is business, you discuss business issues with someone else, you record the name of the other person and what you talked about. Then you can deduct half the cost.
Q: I have a tree cut down in my designated daycare play area. Do I use my time-space % or 100%?
A: Use your time-space % since you get personal use from the tree being cut down.
Q: I have Neatreceipt. Is this the same program?
A: No. Neatreceipt allows you to scan receipts into your computer. KidKare is a comprehensive record keeping program that does much more.
Q: We bought our home this year with cash. How do we deal with this deduction? Do we pay ourselves rent or depreciate the cost of the home?
A: Depreciate your home over 39 years. Do not pay yourself rent. KidKare allows you to record your home as an expense where it will appear in the Depreciation Worksheet.
Q: We had to replace our central air and furnace at a cost of $13,000. How do we enter this?
A: These are home improvements that should be depreciated over 39 years. However, you can also use the 50% bonus depreciation rule and deduct half the depreciation in the first year.
Q: Can I use the KidKare accounting program and track my income, but not use the program to get payments from parents?
A: Yes. You can always use either part or all of the accounting program.
Q: Can I claim meals that the Food Program does not reimburse?
A: Yes. You can deduct up to one breakfast, one lunch, one supper and three snacks per day per child if you serve that many.
Q: What if you do school runs, how would you enter the miles for that or can you?
A: You can count a trip as a business trip if the “primary purpose” of the trip is business related. Primary purpose means more than half of the reason for the trip is business. So, if you are taking your own children and day care children to school, you’d have to be able to argue that the primary reason for the trip was to take the daycare kids to school. This could be hard to prove. I’d probably not try to count such trips as business trips.
Q: Can I claim the interest on a new vehicle I purchased in June of this year? I also moved my daycare in a 100% use space of 320 sq ft to 1600 sq ft home, to 448 sq ft 100% use of 1600 home starting in May, can I claim the new space this year or do I have to wait until next year?
A: Yes, you can always claim the business portion of car loan interest, regardless of which method you use to claim car expenses. The business portion is based on dividing the number of business miles you drove in the year by the total number of miles you drove. Since you used two different homes for your business in one year, you must calculate your time-space% separately for each home and apply them to the separate expenses for each home, by filing two IRS Form 8829s. Unfortunately, KidKare doesn’t allow you to calculate two time-space% for two homes in one year. You’ll have to do this calculation on a separate piece of paper. I’ve written an article about this on my website (www.tomcopelandblog.com).
Q: Will my time/expenses/mileage roll over from Minute Menu to KidKare?
Q: Should I only enter business miles into KidKare?
A: Yes. It’s not necessary to enter personal trips into KidKare.
Q: I drove 90 miles one way to a grocery store. Can I count the time I spend shopping?
A: No. You can only count time spent in your home, not traveling, even if the reason for traveling is solely for your business. You can count the miles if you are buying more business food than personal food.
Q: Do I count miles only if it’s an exclusive business trip?
A: No. You can count miles for trips that are “primarily” for business purposes. That means more than half of the purchases must be for your business. If you are taking trips to places where you would normally buy business and personal items (grocery stores, Costco, Walmart, etc.), do not count all of these trips as business trips. For some of these trips, don’t check the box that will count the miles.
Q: My tax accountant says I can’t claim trips to my bank. Is this correct?
A: No! You can count such trips if the “primary” reason for the trip is your business. If you are going to the bank to deposit checks from your parents and not conducting any personal transactions, this is a business trip. If you are going to the bank to deposit one business check and one personal check, then this is not a business trip because more than half the reason for going to the bank must be for your business.
Q: Can I count the miles my husband drives on his way home from work for groceries?
A: The primary purpose of the trip from your husband’s place of work to your home is personal, so those miles don’t count. If he drives three miles out of his way to get the groceries (in which more business food is purchased than personal food) then you can count the three miles.
Q: How do I claim trips to the grocery store when I purchase business and personal food?
A: If you spend more money on business than personal food, count all the miles. If you are always spending more money on business food, don’t claim every trip. Use as a guideline the percentage of the food you are buying for your business. So, if roughly 80% of the food you buy is for your business, count 80% of the trips to the store as business trips.
Q: Do I enter miles for my business trips at the same time as I’m entering my expenses, or do I do this separately?
A: Enter your miles at the same time you enter your expenses. Check the box that says, “Add mileage for this expense?”
Q: Are car repairs deductible?
A: Only if you use the actual expenses method for claiming car expenses. If you use the standard mileage method you cannot claim car repairs.
Q: Is car registration and car insurance a deduction?
A: Only if you use the actual expenses method for claiming car expenses.
Q: How can I claim what I spent on food but also got credit from the Food Program?
A: Reimbursements you receive from the Food Program are taxable income, with the exception of any reimbursements you receive for your own children. All meals and snacks you serve (up to six servings a day per child) are deductible when using the standard meal allowance method to claim food expenses. This includes meals and snacks you are reimbursed by the Food Program.
Q: I'm serving the children according to the meal pattern requirement, the food program will disallow me if I claim more than (2) meals and (1) snack or(2) snacks and (1) meal where should I record those meals under other hours or what category?
A: If you sponsor allows you to enter these extra meals and snacks, enter them into KidKare and let your sponsor disallow them. When you enter them into KidKare they will be included in the Standard Meal Allowance Report. If your sponsor doesn't want you to enter them into KidKare, then either keep track of these on a separate record outside of KidKare.
Pricing and Subscriptions
Q: I wanted to access to my accounting information. However, I was asked to give my credit card information for the subscription of next year. I totally do not want to save my credit card information that the subscription will be deducted automatically. Please let me know what other options I have to access my accounting information without giving my credit card details.
A: You have to enter your credit card, but you can cancel anytime. And your current subscription will be honored.
Q: Will my previous subscription to Minute Menu continue?
A: Yes. Your subscription that you have already paid for will be honored in KidKare.
Q: Can my assistant claim their cell phone if they use it in my business? Can they claim items they purchase and the time they work after hours?
A: Assistants can only claim business expenses that are not reimbursed by their employee as a Miscellaneous itemized expense on Schedule A. Since you’d have to have a lot of such expenses to itemize, they assistant probably can’t claim any expenses. Assistants can’t count the hours they work because they are not self employed and not working out of their own home.
Q: My iPad has its own cell phone number that I use 100% for my business. Can I deduct 100% of this cost?
A: You can’t deduct the first phone line into your home. Assuming this phone line is not your first phone line, you can deduct 100% of the cost.
Q: I dropped my landline, can I deduct my cell phone?
A: You can’t deduct the first phone line. So, if you now only have one line (the cell phone), you can’t deduct it. If you have two cell phone lines, you can deduct the time-space % of one of them.
Q: May I deduct my cell phone if that’s the only phone line I have?
A: No. You can’t deduct the first phone line into your home, whether it’s a land line or cell phone. You can deduct the time-space% of a second or third line that you use for business and personal purposes. If you use a phone line exclusively for your business you can deduct 100% of the cost. But, the first phone line is never deductible.
Q: Can we email parents with the daily food and child's activities?
A: KidKare does not have this functionality at this time.
Q: Does KidKare still allow me to do daily reports to the parents?
A: KidKare does not have this functionality at this time.
Q: A provider withdraws a child and let's say the parent brings the child back a month later, the provider tries to re-enroll the child but KidKare stops her and say this child is already enrolled in the system but has been withdrawn contact your sponsor. How do I enroll this child online without contacting my sponsor?
A: You must contact your sponsor.
Q: Why do the children's first names in the alphabetical order not their last names?
A: You can sort the children by last name by going to the My Kids screen, and click the orange gear icon in the upper right area of the screen. Choose to sort children by last name. Children will be sorted this way throughout the program.
Q: Can I get training hours for attending the webinar? Can I get a verification that I attended the webinar?
A: Check with your sponsor or licensing organization to see if you can get training hours for attending the webinar. And you will automatically receive a training certificate, at the email address you used to register, 1 hour after the training has ended.
Q: Will KidKare work on a desktop?
A: Absolutely! You can access KidKare.com from pretty much any device with internet access.
Q: Can I track meals that are not reimbursed by the Food Program?
A: Yes. KidKare allows you to enter up to six servings a day. Check with your Food Program sponsor to find out if they will allow you to enter more than three servings a day.
Q: We replaced a window in an exclusive business use room. How do I deduct it?
A: A recent IRS ruling says that if you replace less than half of the windows in your home, you can treat the cost as a repair and deduct it in one year, regardless of the cost. So, since this window is in an exclusive use room you can deduct 100% of the cost.
Q: I bought smoke detectors at Home Depot and two of them are for my daycare area. Can I count the miles and deduct 100% of the cost?
A: You could only count the miles if the primary purpose of the trip was to buy the smoke detectors for your business. I’d only deduct the time-space% of these items unless they are in an exclusive use area. Otherwise, apply your time-space%.
Q: How is KidKare different than Procare Software?
A: KidKare is the only comprehensive record keeping software designed specifically for family child care providers. Procare, like virtually all other daycare software, was designed for child care centers. Some software programs are modified for family child care. But, they are generally too complicated and not specific enough to take advantage of the unique rules affecting family child care providers.
Q: If I don’t have an exclusive use room for my daycare, how do I calculate my time-space%?
A: Most providers don’t have exclusive use rooms. Just enter the number of square feet you use on a regular basis.
Q: How do you check in kids that are half day and come back?
A: Go to the Check In/Out screen. If you're marking them in at the actual in time, you can just hit the name button again. It will add the 2nd "in" time and the button will change to green again. If adding the times in later, hit the arrow next to the child's name to expand and then hit the + button to enter another time in/out for a child in one day.
Q: Do I need to enter each child’s attendance daily?
A: No. But, you want to because it will give you a more accurate count of the number of hours you are working, than relying on your hours of operation.
The information in this post is informational only and should not substitute as legal tax advice. Please verify your information and specific tax questions with your paid tax professional. You can learn more about Tom Copeland and the services he provides here tomcopelandblog.com.