2013 Tax Quiz

Test your tax knowledge by taking this short quiz. See the answers below.

1) If a provider drives two cars for business trips in 2013 can she use the standard mileage rate for one car and the actual expenses method for the other car?    a. Yes      b. No

2) If a provider uses the standard meal allowance rate and cares for children from 7am to 10pm can she deduct a breakfast, am snack, lunch, pm snack , a dinner served at 6pm, and another dinner served at 9pm if the same child ate the 6pm dinner?

    a. Yes     b. No

3) Can a provider deduct the number of meals in the above question if she uses the actual food expenses method?

    a. Yes     b. No

4) Can a provider count the hours spent participating in a webinar on a child care topic after the day care children are gone?

    a. Yes     b. No

5) If a provider uses a van 100% for her business, must she keep a written record of each business trip (receipt, cancelled check, credit card statement, calendar notation, etc.)?

    a. Yes     b. No

6) A provider cares for children from three families. She gives her Social Security number to two families so they can put her number on their 2013 child care tax credit. Can she then obtain an Employer Identification Number (EIN) and give her EIN number to the third family for them to put on their 2013 child care tax credit form?

    a. Yes     b. No

7) A provider has an exclusive use room in 2012. In 2013 her mother-in-law uses the room twice to sleep over. Can the provider count this as an exclusive use room in 2013?

    a. Yes     b. No

8) Can a provider deduct a sewing machine?

    a. Yes     b. No     c. It depends

9) A provider buys a new swing set in 2013 for $1,000 and uses it 100% for her business. She can:

    a. Deduct $1,000 in 2013         b. Deduct $500 in 2013 and depreciate the remaining $500 over 7 years          c. Depreciate $1,000 over 7 years d. All of the above

10) If a provider spends $1,000 in 2013 to replace one heating duct, she can:

    a. Deduct 100% in 2013         b. Deduct the Time-Space Percent amount of the $1,000 in 2013         c. Depreciate the Time-Space Percent amount of the $1,000 over 7 years         d. Depreciate the Time-Space Percent amount of the $1,000 over 39 years

Answers 

1) Yes. Providers can choose which method to use for each car they use in their business.

2) No. Providers who use the standard meal allowance rate may only claim up to one breakfast, one lunch, one dinner, and three snacks per day per child. This provider cannot claim two dinners for one child.

3) Yes. Providers who use the actual food cost method to claim food expenses are not limited to how many meals and snacks they serve per day.

4) Yes. Providers may count all the hours they spend in their home on business activities after the day care children are gone. Such hours could include: cleaning, activity preparation, meal preparation, time on the Internet, parent phone calls, parent interviews, record keeping, etc.

5) Yes. Providers must always keep records to show each business trip, even if the vehicle is only used for business purposes.

6) Yes. Providers can start giving out their EIN number to parents as soon as they get it, even if they have previously given out their Social Security number. Providers can get their EIN number online from the IRS website: www.irs.gov.

7) No. Even a single personal use of a room will destroy a provider's ability to claim this room as an exclusive business use room.

8) It depends. An expense is deductible based on how it is used. Some providers have sewing machines but do not use it for their business and therefore could not deduct it. Other providers use their sewing machines to make clothes for the day care children, curtains for an exclusive business use room, or other items for their business. Such providers could deduct part of the cost of their sewing machine as a business expense.

9) All of the above. A is correct because a provider can use the Section 179 rule to claim in one year such items that are used more than 50% for their business. B is correct because of the 50% bonus depreciation rule in 2013. C is also correct because a provider always has the option of depreciating swing sets, furniture, appliances, and other equipment over 7 years.

10) B is correct because the replacement of a heating duct would be considered a home maintenance or repair. Such a cost does not increase the value of the home and therefore would not be considered a home improvement (answer d). A is not correct because a household heating duct is also used for personal purposes. C is not correct because the heating duct is permanently attached to the home and therefore does not meet the definition of 7 year depreciation property.

How well did you do?

0 correct - Time to start spending more time on record keeping! 

1-5 correct - Good start! 

6-9 correct – Excellent! 

10 correct – You are a master!


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Minute Menu and Tom Copeland have teamed up to offer you the chance to reduce your taxes, receive direct assistance if you are audited, and personalized business advice so you can be more successful. For $15 a year you can join The Child Care Business Partnership and start receiving direct help from Tom Copeland in using Minute Menu Kids Pro. For more information: http://www.tomcopelandblog.com/2013/07/the-child-care-business-partnership-tom-copeland-minute-menu-and-you.html, or email Tom at tomcopeland@live.com.

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Tom Copeland

I've been the nation's leading trainer, author, and advocate on the business of family child care since 1981. I'm a licensed attorney and have presented hundreds of business workshops for family child care providers across the country. I answer thousands of calls and emails each year to help providers, tax professionals and trainers understand complex business and tax issues. Call me at 651-280-5991. Email me at tomcopeland@live.com. Visit me on Facebook. From 1981 to 2009 I worked at Resources for Child Caring in Minnesota (now called Think Small), where I was director of Redleaf National Institute for 15 years. I've written nine books on the business of family child care published by Redleaf Press, a division of Resources for Child Caring. I was on the board of directors of First Children's Finance, a non-profit organization providing low interest loans and consulting and technical assistance to help family child care providers suceed as a business. They operate in Minnesota, Iowa, Michigan, North and South Dakota, Kansas, Missouri, and Texas. Here are some YouTube videos of me talking about my work with this organization and the business of family child care. I graduated from Macalester College (BA) in 1972 and from William Mitchell College of Law (JD) in 1980. I live in St. Paul, Minnesota with my wife Diane and two cats, Duke and Ella.