I Need It By The End Of The Day Today.......

[daycarediva]

Sorry, but you HAVE to claim money given as a gift or bonus as income. Therefore it IS taxable.



I think DaycareDiva means that DCM added her (DCMs) bonuses into what she paid out to DaycareDiva and tried to claim the amount as part of her deductions/expenses.

At least that's how I read it.

Yes, exactly. I know it must be claimed, but my accountant at the time said it all must be claimed separately. Eg. W-10 to my daughter.

[NightOwl]

I think things like w2s have to be issued by Jan 31st, so that's when I issue my statements. And that's what I tell them if they request it sooner.

[CraftyMom]

Why do you have them sign off?

My first year and only family, I sent an email with a pdf statement after last payment cleared. I also gave my DCF weekly receipts, I only did a statement to include my EIN.

To make sure they are claiming the right amount. For example a family that is part time and started toward the end of the year and only paid let's say $800 in daycare tries to claim $3000 in taxes. This may end up in both of you being audited since it looks like you didn't claim enough.

Also if they were at another daycare part of the year and try to claim their entire daycare expense for the year under your tax number, you may end up with an audit because again it looks like you didn't claim enough when in fact they never paid you that amount.

I have never filed daycare expenses for my own kids. But I'm pretty sure that regardless of how much they spent they can only claim $3000 total. Is this correct?

[daycare]

ugh....so the parent that was demanding end of the year statement from me gets an attitude.

I told her well I can't get it to you now, I will have them out at the end of the month as stated. She said well I have your EIN from last year I will figure it out myself. I said fine.

So I don't trust this DCM much at all. What will happen if she does claim way more than she paid me?

We get an audit and I show the money I have collected from her? I have been through a personal audit before but never with my own business.

[mom2many]

I add up my yearly totals at the end of December and give it to the parents the first part of January. I total up each month as I go, so it doesn't take me long to add up the year end total for the kids in my care. I have several p/t families and the most I usually have enrolled at one time is 10 kids.

Usually I get at least 2 parents needing me to print up another receipt, because come tax time they can't find it, but it's not a big deal!

[lovemykidstoo]

ugh....so the parent that was demanding end of the year statement from me gets an attitude.

I told her well I can't get it to you now, I will have them out at the end of the month as stated. She said well I have your EIN from last year I will figure it out myself. I said fine.

So I don't trust this DCM much at all. What will happen if she does claim way more than she paid me?

We get an audit and I show the money I have collected from her? I have been through a personal audit before but never with my own business.

Do you have to figure it from the first of the year or do you have a running total monthly?

[Blackcat31]

ugh....so the parent that was demanding end of the year statement from me gets an attitude.

I told her well I can't get it to you now, I will have them out at the end of the month as stated. She said well I have your EIN from last year I will figure it out myself. I said fine.

So I don't trust this DCM much at all. What will happen if she does claim way more than she paid me?

We get an audit and I show the money I have collected from her? I have been through a personal audit before but never with my own business.

As long as you keep proper records you have nothing to worry about.

She bears the burden of proof if she tries to claim more than she actually paid.

Once you do get the yearly totals figured out, have her sign and date a copy. If it's different than what she already claimed, she'll be the one that will need to amend her taxes and/or prove to the IRS that she paid that amount.

[KiddieCahoots]

Here I go being a Debbie Downer

If you are worried she may give an inaccurate YTD total, maybe you should try and get that to her sooner if possible.
I only say this because I've been audited with my business twice, thanks to my louse of an ex husband, (but that's a story for another day), and it was time consuming, more so than it would've been to get the YTD totals to a client.
My accountant tells me that I must claim any gift in the form of money given to me from a client because that makes it part of the business and taxable.
In all honesty.....would Uncle Sam ever NOT try to have his hand out for some of that money too?

[JoseyJo]

I tell my dcp that I will have their statements by Feb . That is when I have all my accounting and tax info completed . If they need it now then they would have to keep track of their receipts themselves . I also do not give the info out over the phone , I require the parents sign off on the amount they ( and I ) are claiming.

This is exactly what I do

[jenboo]

Question. I don't understand why some of you won't give the year totals to parents until you are done with your taxes or until Feb, march or whenever.
If you record the payments throughout the year, is it really hard to spend 5 min the first week of January to copy it over into another paper for the parents?
Am I missing something?
I'm not trying to be rude, just trying to understand.

[Blackcat31]

From Tom Copeland's site:

How do you treat a gift from a parent?

If a parent gives you a gift of cash or a cash equivalent (gift card), you must report this as income. If a parent gives you a non-cash gift (book, scarf, flowers, etc.) from a parent this would be considered a gift and is not reportable as income.

How do you treat gifts you give daycare families/children:

IRS rules say that you can deduct gifts as a business expense up to $25 per person per year. This means that if you give $25 worth of gifts (birthday cards, Christmas presents, Mother's Day gifts, etc.) to a child's mother and another $25 to the child's father you can deduct the full $50. If you give gifts worth $15 to the mother and $45 to the father, you can deduct $40 ($15 plus $25).

The same $25 per person limit applies to gifts you give to the children in your care. However, the IRS Child Care Audit Guide says, "[IRS] Examiners should not confuse expenses related to activities done with the children with gifts."

Let's say you give a toy as a Christmas present to a child. If the toy is wrapped and the child takes it home to open it, then it's a "gift" subject to the $25 limit. Likewise, if you bought clothing for a child or gave a gift card to the child it would also be considered a “gift.”

However, if the child opens the present at your home and plays with the toy with the other children, then this could be said to be an activity expense not subject to the $25 limit. This would be true even if the child later took the toy home and did not return with it.

Donations:

You cannot claim a personal charitable contribution on any of the gifts you give to the families in your care. This is because families are not a charitable organization. Examples of non-profit charitable organizations are churches, Salvation Army, Goodwill, colleges, etc. You can claim a charitable contribution to such organizations on your IRS personal itemized tax form Schedule A. Gifts to charities cannot be deducted as business expenses





I hope this helps clear up some of the confusion.

[Blackcat31]

Question. I don't understand why some of you won't give the year totals to parents until you are done with your taxes or until Feb, march or whenever.
If you record the payments throughout the year, is it really hard to spend 5 min the first week of January to copy it over into another paper for the parents?
Am I missing something?
I'm not trying to be rude, just trying to understand.

I have 14 families. Payments TO me are all recorded in one receipt book.

I do use MMK but don't always record payments in a timely manner and sometimes just wait until my accountant totals everything up so that I can match totals and cross check accuracy.

So 5 mins to totally something up for 14 families is over an hour of my time that I don't always have available at the moment when a family requests their info.

I also don't like to be micromanaged so I give info when I am done according to MY time line NOT according to the parents'

[SquirrellyMama]

Sorry, but you HAVE to claim money given as a gift or bonus as income. Therefore it IS taxable.



I think DaycareDiva means that DCM added her (DCMs) bonuses into what she paid out to DaycareDiva and tried to claim the amount as part of her deductions/expenses.

At least that's how I read it.

That's how I read it at first also, but then thought, "That's just too bizarre, no way." The only other idea was that they were bonuses for her as a daycare provider. That idea actually made sense.

It is amazing the crazy out there!

Kelly

[jenboo]

I have 14 families. Payments TO me are all recorded in one receipt book.

I do use MMK but don't always record payments in a timely manner and sometimes just wait until my accountant totals everything up so that I can match totals and cross check accuracy.

So 5 mins to totally something up for 14 families is over an hour of my time that I don't always have available at the moment when a family requests their info.

I also don't like to be micromanaged so I give info when I am done according to MY time line NOT according to the parents'

ok idk why it didnt occur to me that record things differently ::
I have one form for each family. I record each payment when i get it so i literally just have to total up one column to have the family's total for the year.
I get it now.
I have never had a parent ask for the paper but I myself, like to be on top of things so I give it to them the first week of January.

[Unregistered]

If you put that info on a spreadsheet instead of on paper, you could have it total automatically. And be ready for printing out. No end of year work whatsoever.