Running a daycare means juggling snack time, nap schedules, parent communication… and then taxes show up right when you’re in the thick of it.
The good news? With a little organization (and this tax prep checklist for daycare providers), tax season doesn’t have to be overwhelming.
Whether you run an in-home daycare, a small child care center, or a multi-location operation, this guide walks you through exactly what to gather, track, and double-check before filing your taxes. This Canada-specific daycare tax checklist is designed to help home daycare providers and child care business owners stay organized, maximize deductions, and file with confidence.
1. Gather Your Basic Business Information
Start with the basic items —you’ll need these for taxes, no matter how you file.
- Legal business name (or your name if you are the sole proprietor)
- SIN or BN (Business Number)
- Business address
- Provincial or municipal daycare licence (if applicable)
- Business bank account details
- Prior year T1 return and Form T2125 (Statement of Business or Professional Activities)
2. Track All Income (Yes, All of It)
Make sure every dollar earned is accounted for.
- Weekly/monthly tuition or fee payments
- Registration or enrollment fees
- Late pickup fees
- Government subsidies or grants
- Cash, cheques, PAD, e-transfer, or app payments
- Year-end income summaries for parents (if issued)
Pro tip: Compare parent payment records to your bank deposits to catch missing income early.
3. Claim Eligible Daycare Business Expenses
Tracking expenses properly can significantly reduce your taxable income.
Everyday Daycare Expenses
- Food and snacks
- Toys, books, games, and learning materials
- Art supplies and crafts
- Cleaning supplies and paper products
- Diapers, wipes, and toiletries
- First aid and safety equipment
Business & Admin Costs
- Advertising and marketing
- Software, apps, or bookkeeping tools
- Office supplies
- Internet and phone (business portion)
- Professional fees (accountant, lawyer, consultant)
- Training, CPR, and continuing education
4. Home Daycare? Don’t Skip These Deductions
If you operate a home daycare, CRA allows you to deduct a portion of home expenses.
- Rent or mortgage interest
- Property taxes
- Utilities (heat, electricity, water)
- Homeowners or renters insurance
- Repairs and maintenance
- Business-use-of-home calculation (space + time)
Keep clear records showing:
- Square footage used for daycare
- Hours your daycare operates vs. personal use
5. Vehicle & Transportation Deductions
If you use your vehicle for daycare purposes:
- Mileage log (date, purpose, kilometres)
- Fuel and oil receipts
- Repairs and maintenance
- Insurance and registration (business portion)
You must choose either:
- Kilometre-based deduction (recommended), or
- Actual vehicle expenses (business portion)
6. Employees, Assistants, or Subcontractors
If you pay helpers:
- Workers’ compensation (WSIB/WCB) premiums
- Employee wages and payroll records
- CPP and EI contributions
- T4 slips issued to employees
- T4A slips for independent contractors
Credits and Deductions to Review
Don’t miss these commonly overlooked tax benefits:
- RRSP contributions to reduce taxable income
- Child Care expense deductions (if applicable)
- Capital cost allowance (CCA) for equipment
- Home office and daycare equipment depreciation
- CPP contributions for self-employed individuals
Final CRA Compliance Checklist
Before filing:
- Keep records for at least 6 years (CRA requirement)
- Complete Form T2125 accurately
- Confirm GST/HST registration status (if applicable)
- Reconcile estimated tax payments
- Organize receipts (paper or digital)
Staying organized for tax season is one of the smartest moves a daycare provider can make for long-term success. By using this tax preparation checklist for daycares throughout the year, you can maximize deductions, reduce filing errors, and avoid last-minute stress when deadlines approach. Whether you operate an in-home daycare or a licensed child care center, keeping accurate records of income, expenses, and time-space usage helps protect your business and your profits.
Bookmark this daycare tax checklist, revisit it regularly, and consider working with a tax professional who understands child care businesses to ensure you’re fully compliant and financially prepared year after year.
