Tax Question

[Unregistered]

Hello,

I live in CT in a Condo. The Condo association does not allow anyone to be a licensed daycare, so I am looking to just babysit 1 or 2 children in my home.

My question is: I have someone who is interested in using me to care for her 8 month old daughter, but she has opted to put childcare on her some forms at work. With doing this I guess she would be reimbursed at the end of the year for childcare. She would need my SSN and I would need to have it on my taxes as well. I'm a little nervous with this because I don't know if I need to be a licensed childcare center in order to have it on my taxes. My husband is the only one working (I'm a stay at home mom). I'm just looking to bring in a little extra "play money". Plus, if I put it on my taxes with the condo association find out? My husband and I own our unit.

Thanks in advance for the help,
Tricia

[TomCopeland]

taxes

Hello,

I live in CT in a Condo. The Condo association does not allow anyone to be a licensed daycare, so I am looking to just babysit 1 or 2 children in my home.

My question is: I have someone who is interested in using me to care for her 8 month old daughter, but she has opted to put childcare on her some forms at work. With doing this I guess she would be reimbursed at the end of the year for childcare. She would need my SSN and I would need to have it on my taxes as well. I'm a little nervous with this because I don't know if I need to be a licensed childcare center in order to have it on my taxes. My husband is the only one working (I'm a stay at home mom). I'm just looking to bring in a little extra "play money". Plus, if I put it on my taxes with the condo association find out? My husband and I own our unit.

Thanks in advance for the help,
Tricia

Any money you earn caring for children (even if you call it babysitting) you must report as taxable income on IRS Form Schedule C. However, you may not have a problem with your condo if you legally able to care for one or two children and not be required to be licensed. Check with the CO child care rules to see if you need to be licensed. If not, then you are fine.

[Margarete]

You can also get a tax ID number from the IRS to use instead of a SSN. You don't have to be licensed to get a tax ID number. You just have to make sure you are 'legally unlicensed' for using it and claiming your income as childcare.
While you will be claiming the income, you will be able to deduct a good portion of your home expenses (based on time spent, and space used). There are a lot of good topics on this form, and information out there to make tax time easier, and to get the deductions you are entitled to.
Good luck!

[inshakhan]

Yes, a tax ID is the way to go ... you can get one online here:
http://www.irs.gov/Businesses/Small-...r-(EIN)-Online . Use that number for your daycare mom to turn into her employer. Most daycare parents will want your ID number because there is also a tax credit for daycare expenses.

Regarding your taxes, you definitely will want to report any income you make. But as Margarete said, there are many expenses you can deduct as well. You need to keep receipts for what you are spending for supplies. You also need to keep track of the meals you feed the children - there is a standard rate for that expense.

Regarding the portion of home expenses you can deduct - the IRS only allows that deduction if you are operating legally according to state licensing. In CO, you don't have to be licensed to watch 1 child, but you do have to be licensed to watch 2 children. So as Margarete said, make sure you are "legally unlicensed" - that would be watching just 1 child. Then you can claim all the home expenses & such that she's referring to.

If you were to watch 2 children, then you would be providing unlicensed care against CO licensing laws, and you would not be able to deduct the home expenses. But you would still be able to deduct all other expenses.

But that's kind of a catch-22 - you'd be operating against the law, but if you were to become licensed, you'd be operating against your condo association's rules ... sounds like your best option is to keep only one child - then you're not breaking anyone's rules

[Margarete]

Every state is different. California we can watch our own family + one family of children without a license. Some states are based on hours a day, others are based on number of children, some include your own children in those numbers, others don't. I don't know what the requirements for "legally unlicensed" are in Connecticut (CT)

[inshakhan]

Every state is different. California we can watch our own family + one family of children without a license. Some states are based on hours a day, others are based on number of children, some include your own children in those numbers, others don't. I don't know what the requirements for "legally unlicensed" are in Connecticut (CT)

Oh I thought she said CO - ... I misread! Well, I tried to look up Connecticut's rules and it sounds really confusing. So I'm not sure what "legally unlicensed" is in CT either! It says that licensing is for providers caring for:

"not more than six children, including the provider’s own children not in school full time, where the children are cared for not less than three nor more than twelve hours during a twenty-four hour period and where care is given on a regularly recurring basis, except that care may be provided in excess of twelve hours but not more than seventy-two consecutive hours to accommodate a need for extended care or intermittent short-term overnight care. During the regular school year, a maximum of three additional children who are in school full time, including the provider’s own children, are permitted, except that if the provider has more than three children who are in school full time, all of the provider’s children are permitted."