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I have a parent that just applied and has been accepted for childcare assistance. They are allowing her to claim back to Dec 11th. Family has paid for this time already. I would love to refund the money back to parents as if I credit it would take around 2 years on assistance for the double payment to be depleted deducting only parents part of payments. My question is, how do I refund something that would show up on my last years w-10. I don't want to pay taxes on payments from last year, just to pay again when I get the money from the state as the payment will be counted as 2024. Any ideas?
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I do my own taxes and I use TurboTax to do so. After you enter your income, you will be asked about returning fees to parent, that is where you put the refund amount.
Example - this year you claim 5000 income and next year you claim 6000 but a refund of 1000. So you are only taxed on 5000. Does that make sense?
Works similar with food program income. You claim 1000 income but then deduct 1000 for food cost. You are taxed on 0.
If I have to refund anyone I do it with my biz checking account to have a paper trail vs the electronic method or in cash. If you use an electronic method make sure you detail the reason for refund, if cash make them sign a document that says why and how much.
(All numbers are made up and don't reflect anything but an example) -
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