HIGHLIGHTING RECEIPTS
By Sharon Riley

On almost every receipt you will have some items that are 100% daycare, some that are 0% daycare (100% personal), and some that are SHARED. How do you organize these???

Buying two different shopping carts doesn't work. If you run out of DC orange juice, will you refuse a DCK a drink from the family orange juice? Of course you won't. If you run out of family bread, will you refuse your husband a sandwich from the DC bread?? No, again. So, highlighting a receipt is the best method I have found.

My clients use the TRAFFIC SIGNAL METHOD of highlighting receipts. When you do your grocery shopping you come home with bags and bags of items and a receipt 2 feet long, right? OK. Buy a GREEN highlighter and a RED (pink, orange, whatever as close as you can get to red) highlighter. GREEN means GO > Straight to my tax return. RED means STOP > Don't go anywhere near my tax return. Anything not marked would be SHARED!

GREEN: On that receipt, you will have several items that are 100% Daycare. If your family hates apple sauce and you buy it ONLY for the DCK's, it 100% DC. If you buy extra diapers for the DCK's > 100%. Wet Wipes >100%. Get the idea?

RED: On that receipt, you will also have several items that are 0% DC or 100% Personal. Tampons, razors, grown up shampoo and conditioner, sodas, food stuffs not available to DCK's, etc. You would mark these RED!

SHARED: Add up your GREENS and your REDS. Then subtract them from the total of your receipt. What you have left is SHARED! This category includes all cleaning products, laundry products, all food that's not 100% DC or 100% Personal, all paper products, etc. Toilet paper, for instance is a consumable because, while it is not eaten, is consumed based on the number of people using it.

Coffee is shared because the Parents drink it, right? Be sure to mark RED only those things that are absolutely personal. Most providers buy an extra big roast and potatoes, etc. and make an extra large pot roast so they can pack up some of it for the DCK's lunch the next day. That makes all those ingredients shared.

This also works for receipts from K-Mart, etc. Don't mix those receipts with your grocery store receipts, however. Makes it too complicated. Receipts from K-Mart and Target should go under Supplies, Sch C, Line 22, on your tax return. ALL items on your grocery store receipts should be called Food & Consumables and go on Sch C, Line 48.

Since everything can ONLY be 100% DC, 0% DC or Shared with the DC, this simplifies your book work.

How do you deduct SHARED? You establish a Share Percentage. That's another post.

The highlighting takes about 5 minutes. The calculations take a little longer depending on how many red and green items you are adding up. Using a program like Quicken streamlines the process.

NELSON & RILEY
http://www.nelsonandriley.biz
813-886-9567 FAX 813-882-9454