Unlicensed and Filing Taxes

[Guest]

Hi! I want to write a small background, because I’ve read some judgmental responses in the past. So I feel this is important.

I took the necessary steps to register a daycare. However, because I rented I wasn’t able to fence off a stream in my backyard. I watch children of friends and family, and all of them have expressed to me that having no license doesn’t mean a thing to them. NYS also changed the legal number allowed from 8 to 6, leaving me either needing an assistant (if I was to try to register again), or unable to afford my own job past my own bills. So, I take the health and safety courses every two years, stay CPR certified, I follow a pre-k curriculum, and make sure my home is up to standards. I just don’t have that price of paper.

My question- I would like to claim every penny I make in taxes. I give my cousins and friends receipts every week, and I save my food receipts. Prior to this year I only watched my cousins children, and so what I claimed in taxes was very small. This year I’m claiming much more. I want to claim every penny I made. Does the IRS check for a license or is my EIN number okay? Will I get in trouble for claiming taxes without a license if it’s a higher amount and clearly more families are also claiming me as their sitter?

Thanks in advance!

[Cat Herder]

To clarify are you running legally or illegally? Are you within or over ratio?

[LittleB]

To clarify are you running legally or illegally? Are you within or over ratio?

Hi! I’m not legal. I tried very hard to be, with the parents there every step of the way. A stream in my backyard that I wasn’t allowed to fence off prevented me from passing inspection. The parents have repeated to me that they don’t want me registered and like things as-is. I’m over the ratio for NYS (2 children).

[Cat Herder]

"Taxation of illegal income in the United States arises from the provisions of the Internal Revenue Code, enacted by the U.S. Congress in part for the purpose of taxing net income. As such, a person's taxable income will generally be subject to the same federal income tax rules, regardless of whether the income was obtained legally or illegally."

https://money.cnn.com/2013/02/28/news/economy/illegal-income-tax/index.html

"Dealt some drugs? Stole some cash? There's a line on your income tax form to declare it. As ridiculous as it sounds, the federal government requires that money acquired through illegal means be reported and taxed just like legitimate income. It's right there on the official IRS tax instructions: "Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or schedule C-EZ (Form 1040) if from your self-employment activity."

[TomCopeland]

provider not licensed

Hi! I’m not legal. I tried very hard to be, with the parents there every step of the way. A stream in my backyard that I wasn’t allowed to fence off prevented me from passing inspection. The parents have repeated to me that they don’t want me registered and like things as-is. I’m over the ratio for NYS (2 children).

Even if you are operating illegally you must still report your income on Schedule C. Since you are operating illegally you cannot claim any house expenses on Form 8829, but you can claim all other expenses on Schedule C. You can't get business liability insurance, and can't be on the Food Program.

[daycarediva]

NYS never changed the law from 8 to 6. That is false. You must have adequate space.

License exempt 2 or fewer daycare children OR you operate for 3 or fewer hours per day
Registered 8 daycare children, 2 must be school age
Licensed 16 children, 4 must be school age (and you must have sufficient staff to cover ratio).

NYS also has some protections for renters. You can put up temporary fencing to pass licensing standards. It's also a criminal offense to operate an illegal daycare and you risk being sued personally, hefty fines, etc.

I hope you get legal, before something happens. I also hope you understand that parents are wishy-washy and ONE disgruntled client can put you in serious legal trouble.