Are you considering applying for the new QRIS levels, but worried about the payments putting you into a higher tax bracket? That is completely understandable, but please consider doing it anyway. There are ways you can minimize the impact that the payments have on your tax situation. Here are just a few ideas. First, just a little disclaimer! I am by no means a tax expert. For tax advice, talk to your accountant. If you are a family child care provider, check out Tom Copeland’s blog. Even though Tom has retired, a group has taken over the website and will maintain it to help benefit family child care programs.
Be sure to put back about 25-30% of your payment for tax season next year. This will help keep you from being surprised and in pain at tax time! If you don’t end up owing, you’ll still be happy you saved it, because now you can use it for something else.
Use the money to help you meet the new QRIS requirements for your STAR level! Anything you spend doing that should be deductible and reduce your bottom line, which reduces your taxes!
Reinvest in your child care program. Use the money to buy toys and supplies that you can deduct off your taxes to reduce your tax liability next year. Check the IRS rules and/or with your accountant for limits on how much you can deduct. These change from year-to-year, so it’s best to investigate the rules regularly.
Do some work-related travel! Have a child care conference that you have always wanted to attend? For example, the National Association for Family Child Care (NAFCC) or the National Association for the Education of Young Children (NAEYC) conferences? Your portion of the travel expenses, the conference fees, etc. would all be deductible from your taxes AND you could learn a lot and have a great adventure!
Invest in your personal resource library! Curriculum and resource books can be pricey, but this would be a great opportunity to purchase some of those books you’ve always wanted and reduce your tax liability.
Invest in your retirement. There are several different tax benefits in starting retirement funds. Here is a link to a webinar that Tom Copeland did in May about family child care and retirement: click here.
Child care centers: invest in your staff! Treat them to a professional development training with lunch. Or I know a director who does a staff retreat every year with her staff where she provides training, but they also play games and do activities together. For example, last year, they did the Indoor Skydiving in OKC. (I’d be NOPING right out of that myself, ha, but it would be fun to watch others do it).
The bottom line is, please take advantage of these new QRIS benefits while they’re available! Please don’t let the fear of higher taxes keep you from taking advantage of this opportunity!
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