Updated October 28, 2026. Quick answer: The Daycare Facility Worksheet in the Schedule C instructions is a three-line worksheet that turns the hours your home was used for daycare into a decimal. That decimal goes on line 3b of the Simplified Method Worksheet and shrinks the $5-a-square-foot rate when the space was not used only for daycare.
What it is for
“Use this worksheet to figure the percentage to use on line 3b of the Simplified Method Worksheet. If you don’t use the area of your home exclusively for daycare, you must reduce the prescribed rate before figuring your deduction using the simplified method.” It does not apply to a space used only for business: “If you used at least 300 square feet for daycare regularly and exclusively during the year, then you don’t need to complete this worksheet.” The larger business-use-of-home question is covered at Schedule C line 30 and the home office deduction.
Who can use the daycare rate
Publication 587 explains the fraction: “If you do not use the area of your home exclusively for daycare, you must reduce the prescribed rate (maximum $5 per square foot) before figuring your deduction.” “The reduced rate will equal the prescribed rate times a fraction. The numerator of the fraction is the number of hours that the space was used during the year for daycare and the denominator is the total number of hours during the year that the space was available for all uses.” The daycare exception to the exclusive-use rule has its own conditions: “You must be in the trade or business of providing daycare for children, persons age 65 or older, or persons who are physically or mentally unable to care for themselves.” “You must have applied for, been granted, or be exempt from having a license, certification, registration, or approval as a daycare center or as a family or group daycare home under state law. You do not meet this requirement if your application was rejected or your license or other authorization was revoked.”
The three lines
| Line | What the worksheet says |
|---|---|
| 1 | “Multiply days used for daycare during the year by hours used per day” |
| 2 | “Total hours available for use during the year. See the Instructions for the Daycare Facility Worksheet” |
| 3 | “Divide line 1 by line 2. Enter the result as a decimal amount here and on line 3b of the Simplified Method Worksheet” |
How to figure the hours
“Line 1. Enter the total number of hours the facility was used for daycare during the year.” The instructions’ example: “Your home is used Monday through Friday for 12 hours per day for 250 days during the year. It’s also used on 50 Saturdays for 8 hours a day.” That is 3,000 hours on weekdays plus 400 on Saturdays, 3,400 in all. (The instruction text there says to enter the result on ‘line 4’; the worksheet printed below it has the hours on line 1.)
“Line 2. If you used your home for daycare during the entire year, multiply 365 days (366 for a leap year) by 24 hours, and enter the result.” “If you started or stopped using your home for daycare during the year, you must prorate the number of hours based on the number of days the home was available for daycare.”
The example worked through the worksheet
| Line | Amount |
|---|---|
| Line 1, computed: 250 weekdays x 12 hours = 3,000 plus 50 Saturdays x 8 hours = 400 | 3,400 |
| Line 2, computed: 365 days x 24 hours | 8,760 |
| Line 3, computed: 3,400 divided by 8,760, rounded to four places (our rounding) | 0.3881 |
To show where the decimal goes, put 0.3881 on line 3b of the Simplified Method Worksheet for a home with the full 300 square feet allowed.
| Line of the Simplified Method Worksheet | What it is | Amount |
|---|---|---|
| 2 | Allowable square feet, not more than 300 (illustration: 300) | 300 |
| 3a | Maximum allowable amount, printed on the worksheet | $5 |
| 3b | The decimal from the Daycare Facility Worksheet | 0.3881 |
| 3c | Computed: 5 x 0.3881 = 1.9405, entered to two decimal places | $1.94 (computed) |
| 4 | Computed: 300 x 1.94 | $582.00 (computed) |
So the simplified method allows $582.00 on these invented facts, before the gross income limitation that applies to every home business deduction.
Edition
This page reads the Instructions for Schedule C (2025), the file irs.gov served on 2026-10-28 (sha256 in the kit data). It covers the 2025 return, filed in 2026. Use the worksheet and the per-square-foot amount printed in your own year’s instructions.
Common mistakes
- Completing the worksheet when you used 300 square feet regularly and exclusively for daycare. The instructions say it is not needed then.
- Using only the days the home was used. Line 2 is all the hours available, 24 hours times the days available.
- Forgetting to prorate line 2 when you started or stopped daycare during the year.
- Entering a percentage rather than a decimal on line 3b. The worksheet says to enter the result as a decimal amount.
Related: Schedule C line 30, home office deduction, Form 8829, and Schedule C business code for child care.
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Answer againSources
- Instructions for Schedule C (Form 1040) (2025), Profit or Loss From Business: https://www.irs.gov/pub/irs-pdf/i1040sc.pdf
- Publication 587 (2025), Business Use of Your Home: https://www.irs.gov/pub/irs-pdf/p587.pdf
Read from the IRS documents linked above on October 28, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.