Whether you work for yourself or someone else, worrying about care of your children while you are at work can cause both financial and emotional stress. Well relax; the IRS is here to help. The Child and Dependent Care Credit is available to many taxpayers for care incurred during vacations and throughout the year. For parents who are working (or looking for work) and arrange for day care for their children under thirteen years of age, this credit may provide some reimbursement toward the cost of this care.
What you need to know:
•You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to calculate the credit.
•The range of the actual credit is between 20 and 35 percent of your qualifying expenses, depending upon your income. Unlike many other deductions and credits, there is no upper limit on the amount of your adjusted gross income.
•You (and your spouse if filing jointly) must have earned income during the year.
•Both in-home sitters and daycare facilities outside the home qualify you for some tax benefit if you are eligible for the credit.
•The cost of day camp may count as an expense towards the credit. However, expenses for overnight camps do not qualify.
•When you submit your tax return, you must complete IRS Form 2441 and provide the name and tax identification number for the individual providing the care.
•This is a tax CREDIT, which directly reduces the amount of tax due on your return. However, it is a nonrefundable tax credit - which means that it cannot reduce the amount of tax due to less than zero.
Please see IRS Publication 503 (http://www.irs.gov/pub/irs-pdf/p503.pdf) for more information.
Reflections on Equine Affaire MA
In my opinion, this year Equine Affaire attracted an even bigger crowd than in recent past years - this in a time when the sentences in many news broadcasts start with phrases such as "Due to the recession", "As a result of the poor economy", etc. And people weren't just there - they were buying! How did they do it? What is it about Equine Affaire that attracted you to attend?
This month, rather than discussing an accounting or tax topic related to horse businesses, I want to get down to basics. Equine Affaire has found a way to attract vendors, presenters and consumers in droves. Rather than accept the premise that a poor economy is an insurmountable obstacle to a successful event, they just "made it work".
Do you view the current economy as an opportunity? Demand still exists in the horse industry but it might no longer be for the goods or services upon which your business is currently focused. Has your business kept pace with the changing economy? Is there something you can do to meet these new demands?
There will be a wide variety of options available to you, based on your individual situation. But you need to evaluate which ones are best for you. Do some research. Talk to your customers to find out what they need, not what you think they need. Do they have an unmet need that you can satisfy? Look at businesses that are successful now. What are they doing right?
Identify your target market? Who is your ideal customer and how can you market to reach them?
When you have a defined concept of what needs to be done in your business in order to change to adapt to current conditions, create a business plan. Be as detailed as possible with benchmarks that you hope to reach within a specific timeframe so you have a method to evaluate your progress. Keep detailed financial records so you have solid numbers, rather than using impressions and feelings as guideposts.
I know that when times are tough, it feels pretty overwhelming to consider making big changes that involve a lot more commitment and energy on your part. But the payoff will make it all worthwhile. You know owners of horse-related businesses who were "making it work" for them so it is possible. We can't all be Equine Affaires. But maybe you can be.
This month, rather than discussing an accounting or tax topic related to horse businesses, I want to get down to basics. Equine Affaire has found a way to attract vendors, presenters and consumers in droves. Rather than accept the premise that a poor economy is an insurmountable obstacle to a successful event, they just "made it work".
Do you view the current economy as an opportunity? Demand still exists in the horse industry but it might no longer be for the goods or services upon which your business is currently focused. Has your business kept pace with the changing economy? Is there something you can do to meet these new demands?
There will be a wide variety of options available to you, based on your individual situation. But you need to evaluate which ones are best for you. Do some research. Talk to your customers to find out what they need, not what you think they need. Do they have an unmet need that you can satisfy? Look at businesses that are successful now. What are they doing right?
Identify your target market? Who is your ideal customer and how can you market to reach them?
When you have a defined concept of what needs to be done in your business in order to change to adapt to current conditions, create a business plan. Be as detailed as possible with benchmarks that you hope to reach within a specific timeframe so you have a method to evaluate your progress. Keep detailed financial records so you have solid numbers, rather than using impressions and feelings as guideposts.
I know that when times are tough, it feels pretty overwhelming to consider making big changes that involve a lot more commitment and energy on your part. But the payoff will make it all worthwhile. You know owners of horse-related businesses who were "making it work" for them so it is possible. We can't all be Equine Affaires. But maybe you can be.
Being a manager of your talentfrom FaithWhat does it take to be an artist manager? Well that is quite the question; it takes improvisation, structure, organization, patience, perseverance, dedication, a lot of public relations but most of all self confidence. In this field you're leading a human being for all types of things from diets to food and accommodations.In my personal
Equine Accounting: On the road again...deductible expenses from horse show travel
With show season behind us for most parts of the country, it's a good time to discuss which expenses which are incurred while you are showing "away from home" are deductible. This will help you when getting information together for your current year tax return as well as preparing for next season's expenses.
In general travel expenses are deductible if they are directly related to conducting your business. "Ordinary and necessary" (as defined by the IRS: an ordinary expense is an expense that is common or accepted in the taxpayer's trade or business; a necessary expense is one that is appropriate for the business) travel expenses such as transportation, lodging and incidental travel costs, such as laundry, tips etc. would be deductible if supported by documentation such as receipts. Be sure to document the business purpose of each expense.
The cost of meals consumed on a business trip are deductible, subject to a 50% limit. Again,only the ordinary and necessary costs of meals are deductible. Facts and circumstances dictate what is considered ordinary and necessary but keep in mind the ultimate determination is made by the IRS (if your are audited).
If you engage in both personal and business activities while on your trip, be sure to document in detail which costs are associated with your business. If you travel to a location for primarily personal purposes and while there, transact business, the costs of travelling to and from the location would NOT be deductible. But if you travel for primarily business purposes, then your costs of travelling to and from the location would be deductible. You would allocate the costs incurred while there between personal and business and only the business portion would be deductible. If your transportation costs for showing are significant, the tax savings of determining those costs to be deductible could b substantial.
If anyone else (including your spouse) accompanies you on your business trip, in order for those expenses to be deductible, the person accompanying you must work for your business, their presence must serve a bona fide business purpose and the costs would have been deductible had they been incurred by someone who was not accompanying you.
There MUST be a business purpose for showing, in order for the related expenses to be tax deductible. Don't rely on theory and generalities to prove your point to the IRS if you are audited. At every show, keep a record of who you coached, what potential clients you met, the sales horses you rode, etc. If you need to accumulate certain scores or ribbons in order to be certified as a judge/instructor/etc., document which shows and which classes you entered in order to fulfill your requirement. You can use this information not just in case of an audit but in planning for the same show next year, to send out marketing materials and to track fulfillment of any continuing education requirements.
Showing can be a great marketing tool and a legitimate tax deduction. Keep detailed records and follow IRS regulations. Best wishes at the show!
In general travel expenses are deductible if they are directly related to conducting your business. "Ordinary and necessary" (as defined by the IRS: an ordinary expense is an expense that is common or accepted in the taxpayer's trade or business; a necessary expense is one that is appropriate for the business) travel expenses such as transportation, lodging and incidental travel costs, such as laundry, tips etc. would be deductible if supported by documentation such as receipts. Be sure to document the business purpose of each expense.
The cost of meals consumed on a business trip are deductible, subject to a 50% limit. Again,only the ordinary and necessary costs of meals are deductible. Facts and circumstances dictate what is considered ordinary and necessary but keep in mind the ultimate determination is made by the IRS (if your are audited).
If you engage in both personal and business activities while on your trip, be sure to document in detail which costs are associated with your business. If you travel to a location for primarily personal purposes and while there, transact business, the costs of travelling to and from the location would NOT be deductible. But if you travel for primarily business purposes, then your costs of travelling to and from the location would be deductible. You would allocate the costs incurred while there between personal and business and only the business portion would be deductible. If your transportation costs for showing are significant, the tax savings of determining those costs to be deductible could b substantial.
If anyone else (including your spouse) accompanies you on your business trip, in order for those expenses to be deductible, the person accompanying you must work for your business, their presence must serve a bona fide business purpose and the costs would have been deductible had they been incurred by someone who was not accompanying you.
There MUST be a business purpose for showing, in order for the related expenses to be tax deductible. Don't rely on theory and generalities to prove your point to the IRS if you are audited. At every show, keep a record of who you coached, what potential clients you met, the sales horses you rode, etc. If you need to accumulate certain scores or ribbons in order to be certified as a judge/instructor/etc., document which shows and which classes you entered in order to fulfill your requirement. You can use this information not just in case of an audit but in planning for the same show next year, to send out marketing materials and to track fulfillment of any continuing education requirements.
Showing can be a great marketing tool and a legitimate tax deduction. Keep detailed records and follow IRS regulations. Best wishes at the show!
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