Your business may qualify for deductions or exemptions from the B&O tax for:
- Care of children under eight years old and below the first grade.
- Care by a church that is exempt from property tax, for periods less than 24 hours.
- Funds received for health or social welfare services.
Care of children under eight years old
You may deduct from your gross income amounts received for providing child care to children under the age of eight and who are not enrolled in first grade or above. If you provide child care for children of all ages, you will need to carefully record the income received for each child to claim the deduction. If you take a deduction, you must include the amount as part of your gross income. When taking deductions, you must identify the reason on the Deduction Detail pages of the excise tax return.
Care provided in church facilities
Regardless of the children's ages, the B&O tax does not apply to income from day care provided by a church that is exempt from property tax under RCW 84.36.020. You do not need to report this income on the excise tax return and you may not need to register with the Department of Revenue.
Care paid by Federal or State Government
Nonprofit corporations qualifying as health or social welfare organizations may take a B&O tax deduction for amounts received from federal, state or local government as compensation for providing health and social welfare services, such as day care. For information about health or social welfare organizations, please refer to Washington Administrative Code (WAC) 458-20-169.