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Section 5: Financial Matters 33 Handling Your Finances FCCH I/II + LE Providers As a child care provider, you should understand the financial aspects of caregiving. The actual fee charged is generally modest. It is an advantage to work through deductions allowed for using a private home for business purposes. You are classified as a self-employed person and are, therefore, liable for self-employed Social Security payments. Check with your nearest Social Security Office. This allows you to build up Social Security credits in your own right. Form 1040 Schedule E, or the latest equivalent form, is filed with the income tax form. • If the combined family income, including your earnings, is too low to pay income tax, using deductions is not the best method. • If the combined income is at a level where you pay income tax, check with your Internal Revenue Office to determine whether the work involved in keeping records is worthwhile. Expenditures Two types of expenditures are possible — direct expenditures, such as cost of food and toys; and indirect expenditures, which relate to the use of the home/facility where you provide care, such as rent, utilities, mortgage payments, etc. You are advised to consult with an attorney or accountant concerning financial and tax matters. Direct Expenditure Tips 1. Keep detailed records of all expenditures. Separate out the deductible direct expenses for food, toys, supplies, cribs, as well as the cost of any advertisements (exclude your own family expenses). 2. Retain sample menus to gauge weekly costs for food. Itemize all food expenses. For example, if the cost of a meal is $18, divide by three children and the cost per child per week would be $6. Then figure the number of weeks per year that each child was in your care. For example, $6 a week per child for 40 weeks is $240. For three children, it would be $720.