Holding Fee received 2011 for services in 2012

[VTMom]

I received a small holding fee this year for a spot opening in October 2012. Do I treat this as income for 2011? Can the family use this as a child care credit this year, or not until next year since the baby hasn't been born yet (due in May)?

Anyone know how this works?

Thanks for your help!

[TomCopeland]

when to report income?

You should report any money you received in your business in the year you received it, not the year you earned it. So, a holding fee received in 2011 for care that will be given in 2012, should be reported as income to you in 2011. The parent can't claim the child care tax credit in 2011, because the child isn't born yet.

[VTMom]

Thanks for your response! That's what I was thinking, but I was worried that they wouldn't be able to claim it so the transaction wouldn't be whole. Thanks for clarifying!