IRS Eases Recordkeeping Rules for
Day Care Providers

WASHINGTON - Day care providers who operate businesses in their homes will find it easier to file their federal income tax returns because of simplified recordkeeping rules.

Under a ruling issued today by the Internal Revenue Service, is a room is available throughout the business day and is regularly used for day care, the square footage of that room will be considered as used for day care for the entire business day. This new rule eliminates the need for a day care provider to keep records of the specific hours of business use of that room.

For example, a day care provider uses a bedroom available for child care throughout the business day for the children's morning and afternoon naps every business day. Even though the bedroom is not used during every hour of the business day, the total square footage of that room is considered as day care usage for the entire business day.

According to the IRS, day care providers should figure this deduction on Form 8829, Expenses for Business Use of Your Home. This new form allows someone who operates a business in the home to list all the expenses from that business on one form, making it easier to determine the business owner's allowable deductions. This form along with Schedule C, Profit or Loss From Business, is attached to the day care provider's income tax return.

Revenue Ruling 92-3 providing more details appears in Internal Revenue Bulletin 1992-3, dated Jan. 21, 1992.

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