You can deduct the utilities by entering the amount in the "home office" deduction section. If you want to expense the utilities, you will have to opt out of the simplified deduction. The simplified deduction may or may not be beneficial. You should compare the actual expenses and simplified deduction before deciding.
Here's how to do this in TurboTax Online:
- Open or continue your return.
- Navigate to the Schedule C section: Federal > Wages & Income > Self-Employment > Edit > Add expenses for this work > Home office
- Answer the questions about the home and "office" (daycare)
- Answer you want to take actual expenses (It will tell you the simplified deduction amount here)
- You will have questions to answer about mortgage, etc. You will get to a page called "Enter utility expenses". There you can enter either the utilities for the whole home that will be allocated or home office utilities only, which can be entered if the daycare's utilities are billed separately.