@KittyMama wrote:
HI!! I want to jump on this subject real quick, hope you guys don't mind!
So, is the answer that: we can't have a dog or cat daycare and be able to claim it as a business?
OR
just that we can't claim the use of our homes for the care.
I do kitten rescue/fostering/"babysitting" for others AND I charge and ave a lot of expenses such as food, toys, furniture and medications NOT paid for by owners or rescues. Plus, My WHOLE house is a daycare! 😄
Can I not claim this as a business? Because t is as is the individual with a doggy daycare I believe.
and if not, can we just say "daycare" and be non specific and claim or honest costs and deductions without having to SAY what we care for?
Thank you!!
Of course you have a business. Any time you provide goods or services in return for compensation (any kind of compensation, including money, barter, or other things) you would be considered self-employed and you must report all your business income and you can deduct your "ordinary and necessary" business expenses.
The specific issue here is the "home office" deduction, or "business use of the home."
More generally, the problem is how to deduct expenses that are shared between a business and a personal expense. You can't deduct a personal expense on your business. There are a lot of specific details involved there. For example, if you provide the same food to your personal pets and your rescue or foster animals, you can't deduct the food as a business expense unless you have some reasonable way of allocating the cost between personal and business. (Naturally, if you keep the food supplies separate, you can deduct all the food supplies used for the business.)
Business use of the home follows special rules because a home is a personal expense. You can only deduct business use of your home if the home is your regular place of business, and if you set aside an area of your home that is used exclusively for business and never for personal use. Then, you can deduct a percentage of your home expenses (insurance, utilities, and so on) as a work expense. If you were a contractor for example, and used a spare bedroom as your office where you sent bills, made appointments, wrote out permit applications and so on, and did not use the bedroom for personal living space, then you can use the home office deduction. But if you did your administrative work at the kitchen table, you can't take the home office deduction. Or if you use half the basement exclusively to store inventory. And so on.
Then, there is a special rule if you are a home childcare provider. You can deduct part of your household expenses as a business expense if you provide childcare in your home, even though you don't use your home exclusively for your childcare business. This special rule only applies to human child care, not animal day care.
So for pet rescue, pet-sitting, boarding, and so on, it is certainly a business and you can deduct allowable business expenses, but your regular household expenses are not allowable business expenses unless you use part of the house exclusively for pet-sitting and no other purpose. Even if you use the yard exclusively, there's nothing you can deduct there because the business use of home rule is based on square footage of structures, not land. (However, if you had a shed in the backyard where you kept your supplies, or kennels that were "Structures" permanently attached to the land, then those structures would allow you to claim a partial home office deduction if they were used exclusively for work)
On top of all of this, there is the simplified vs complicated home office deduction we could talk about, but first you have to show you qualify for any home office deduction in your particular situation.
