April 11, 2026

What Your Accountant Needs From You at Tax Time

Every year, accountants chase down home daycare clients for the same missing information. The forms are due, but the provider doesn't have their numbers organized, their receipts are scattered, and the whole process takes twice as long as it should. Here's what to have ready so your accountant can file your Schedule C without delays — and without billing you for extra hours.

1. Total income by source

Your accountant needs to know how much money came in and where it came from. For most home daycare owners, this breaks down into:

• Tuition payments from parents (cash, check, Venmo, Zelle, etc.)
• CCAP payments from the state subsidy program
• CACFP reimbursements from the food program
• Other income (late fees, registration fees, field trip fees, grants)

All of this goes on Schedule C, Line 1 as gross receipts. Your accountant needs the total for the year, ideally broken down by month so they can cross-reference with bank deposits.

In DaycareProfit, every payment you log is automatically categorized by source. At the end of the year, your income summary is already broken down by tuition, CCAP, CACFP, and other — ready to hand off.

2. Expenses organized by IRS category

This is where most providers struggle. Your accountant doesn't need a list of every individual purchase — they need totals by IRS category. Schedule C Part II has specific expense lines, and your accountant needs your numbers to match. Here are the categories that apply to home daycare:

• Food & Meals — groceries, snacks, and meals for daycare children
• Supplies — cleaning products, craft supplies, diapers, office supplies
• Toys & Equipment — play equipment, educational toys, cribs, high chairs
• Insurance — liability insurance, business insurance premiums
• Training & Education — CPR classes, continuing education, workshops
• Marketing — flyers, website, advertising, business cards
• Transportation (Mileage) — grocery runs, supply trips, field trips at $0.725/mile
• Licensing & Fees — state licensing fees, background check fees, DCFS fees
• Repairs & Maintenance — home repairs in daycare spaces, carpet cleaning
• Cleaning — cleaning services, laundry costs for daycare linens
• Rent / Mortgage Interest — deducted at your Time-Space percentage
• Utilities — electric, gas, water (deducted at Time-Space %)
• Phone & Internet — business-use portion of your phone and internet bills
• Property Tax — deducted at your Time-Space percentage
• Professional Services — accountant fees, tax preparation, legal advice
• Software & Subscriptions — daycare management apps, bookkeeping tools
• Bank & Processing Fees — payment processing fees, business account fees
• Lawn & Outdoor — yard maintenance, playground upkeep, outdoor safety
• Assistant / Helper — wages paid to a daycare assistant

If you hand your accountant a shoe box of receipts, they have to sort and total everything themselves — and they'll bill you for that time. If you hand them a summary with totals per category, they can plug the numbers into your return in minutes.

DaycareProfit has all 19 of these categories built in. Every expense you log gets sorted into the right one automatically. At tax time, you download the report and your accountant has exactly what they need — no sorting, no guessing, no extra billable hours.

3. Time-Space percentage calculation

Your accountant needs your Time-Space percentage to calculate the business-use portion of your home expenses. This is how the IRS determines what share of your rent, utilities, property tax, and insurance you can deduct. To compute it, they need:

• Total hours your home was used for daycare during the year
• Number of rooms used regularly for daycare vs. total rooms

Many accountants who don't specialize in home daycare may not even ask for this. If yours doesn't, bring it up — it's one of the largest deductions available to you and can easily be worth thousands of dollars per year.

Not sure what your Time-Space percentage is? Use our free Time-Space calculator to find out in 60 seconds. Better yet, enter it once in DaycareProfit and the app applies it to every shared expense you log throughout the year — so the deduction is already calculated on your tax report when your accountant asks for it.

4. Home expenses (the shared costs)

Once you have your Time-Space percentage, your accountant applies it to your shared home costs. Have the annual totals ready for each of these:

• Annual rent or mortgage interest (from your 1098 form if you own)
• Property taxes
• Homeowner's or renter's insurance
• Utilities (electric, gas, water, internet, phone)

If you pay rent, the total is straightforward. If you have a mortgage, your lender sends a 1098 form with the interest amount. For utilities, add up 12 months of each bill.

When you log these in DaycareProfit, the app automatically flags them as shared expenses and applies your Time-Space percentage. Your accountant gets a clean number they can plug directly into your Schedule C — no manual calculation needed.

5. Receipt documentation

Your accountant doesn't need to see every receipt to file your return, but you need to have them. The IRS requires that you be able to substantiate any deduction you claim. If you get audited, “I remember buying it” isn't enough. You need the receipt or a bank/credit card statement showing the transaction.

The IRS generally requires you to keep supporting documents for at least 3 years from the date you file your return. That means your 2026 receipts need to be accessible through at least 2029. Paper receipts fade, get lost, and take up space. Digital copies are accepted by the IRS as long as the image clearly shows the vendor, date, amount, and items purchased.

This is one of the biggest reasons providers use DaycareProfit. When you log an expense, you snap a photo of the receipt right then and it gets attached to that expense automatically — categorized, dated, and stored. No shoeboxes, no folders, no scrambling in March.

You can view any receipt at any time from your phone or computer. And when you want an extra layer of protection, you can download your full receipt archive to your computer, save a copy to a flash drive, or email it to yourself as a backup. That way your records are stored in multiple places and you're covered for the full 3 years the IRS requires — even if you switch phones, lose a device, or change email providers.

6. Vehicle mileage log (if applicable)

If you drive for daycare-related purposes (grocery runs, supply stores, training events, transporting children), you can deduct mileage at the 2026 IRS standard rate of $0.725 per mile. But you need a log that shows the date, destination, purpose of the trip, and miles driven. The IRS won't accept a lump estimate at the end of the year — they require contemporaneous records, meaning you need to log trips as they happen.

Even short trips add up. A 6-mile round trip to the grocery store is a $4.35 deduction. Do that twice a week for a year and you're looking at over $450 in deductions just from grocery runs. Log your mileage in DaycareProfit alongside your other expenses — it gets categorized under Transportation on your Schedule C and shows up on the tax report your accountant receives. No separate mileage log to maintain.

7. CACFP records (if enrolled)

If you participate in the Child and Adult Care Food Program, your accountant needs to know whether you're using the standard meal allowance or actual food costs. They'll also want your attendance records and meal counts to support the food deduction. The CACFP reimbursement itself is taxable income, but the food expenses offset it. In DaycareProfit, your CACFP reimbursements are logged as income and your food purchases as expenses — so the net impact on your tax return is already clear in your report. For a detailed breakdown of what to track, see our CACFP record keeping guide.

The difference between a 30-minute tax prep and a 30-day headache

The providers who have the smoothest tax seasons are the ones who track everything throughout the year instead of reconstructing it in March. If you're logging income, expenses, and receipts consistently, pulling this together takes minutes when tax time comes.

That's exactly what DaycareProfit is built for. Every expense you log gets sorted into the right IRS category. Every receipt gets attached automatically. Your Time-Space percentage is calculated for you. And when your accountant asks for your numbers, you download one report that has everything they need — income by source, expenses by category, deductions by Schedule C line, and receipts organized and backed up.

For a line-by-line walkthrough of how all of this maps to your tax return, read our Schedule C guide for home daycare. And for the full list of everything you can deduct, check out our complete tax deduction list.