Unlicensed/Illegal Daycare And Taxes

[Alwaysgreener]

This was my former daycare person. She was watching way more than the legal amount of children. Cash only, refused to give her SS# and was not paying taxes. We recently fired her and I am debating if I should report her of if I would get hit as well for not claiming what we paid to her the past nine years. Full disclosure, this person has been watching kids from her home for 15 years and not paying taxes. What should I do? Look the other way?

Personally I think you should talk to Tom Copeland about this. He commented to the poster above yours and has his web link in his post. If he doesn't respond, go to his website and ask him there.
Also in the meantime, browse his blogs for for other information that may help you.

[TomCopeland]

unlicensed

what form do you file if your are unlicensed?

File Schedule C. If you are legally unlicensed you can also claim house expenses on Form 8829. If you are operating illegally you can't claim any house expenses (those shown on Form 8829).

[LostMyMarbles]

This was my former daycare person. She was watching way more than the legal amount of children. Cash only, refused to give her SS# and was not paying taxes. We recently fired her and I am debating if I should report her of if I would get hit as well for not claiming what we paid to her the past nine years. Full disclosure, this person has been watching kids from her home for 15 years and not paying taxes. What should I do? Look the other way?

Clearly what she was doing was wrong by not reporting it. But I’m sure you were told upon enrollment that she would not be claiming it, and probably gave you a discount due to that. She was wrong, but I feel you were wrong for enrolling their knowing she wasn’t claiming.

[Alwaysgreener]

Clearly what she was doing was wrong by not reporting it. But I’m sure you were told upon enrollment that she would not be claiming it, and probably gave you a discount due to that. She was wrong, but I feel you were wrong for enrolling their knowing she wasn’t claiming.

That is true. But sadly, at least here, there no laws for being stupid and putting their child in an unsafe environment. (Although he keeps risking his child for a discount, he may not have his child much longer)

As a provider, I think she should be turned in, even though he maybe doing it out of spite and the other families are going to be left with out care. Either way, she is out of ratio and should be reported.

He could just report her to the IRS, Tom has a blog about how, and then she wouldn't be shut down right away but get audited instead.

[Unregistered]

If you are illegally unlicensed, what happens if someone tries to claim with child care tax credits?

[Blackcat31]

If you are illegally unlicensed, what happens if someone tries to claim with child care tax credits?

This depends on what state you are in and how many children you are illegally caring for.

[Unregistered]

This depends on what state you are in and how many children you are illegally caring for.

CA, 14 kids?

[Cat Herder]

CA, 14 kids?

I would make the front page of my local newspaper with that. And not in a good way.

[Blackcat31]

CA, 14 kids?

Yikes... I agree with Cat Herder.

That is pretty risky considering the fine for operating illegally in CA is up to $200 PER day PER child and could be a felony charge.

If a parent, neighbor or anyone withi this info reports you, you could be facing enormous legal issues as CA is one of the strictest states in prosecuting illegal care providers.

https://www.berkeleyparentsnetwork.o...ed%20operation.

I went and did a bit of reading on the IRS site and apparently if you are operating illegally and caring for more than 6 children, it sounds like the parent won't be able to claim their expenses and if they try to the IRS would be alerted.

I am not 100% positive as reading the IRS site is as easy as reading a upside down and backwards but bottom line is you could end up in some really big legal trouble.

I'd research getting licensed and start the process.
The faster you become legal the less trouble you might face.

[TomCopeland]

unlicensed

Yikes... I agree with Cat Herder.

That is pretty risky considering the fine for operating illegally in CA is up to $200 PER day PER child and could be a felony charge.

If a parent, neighbor or anyone withi this info reports you, you could be facing enormous legal issues as CA is one of the strictest states in prosecuting illegal care providers.

https://www.berkeleyparentsnetwork.o...ed%20operation.

I went and did a bit of reading on the IRS site and apparently if you are operating illegally and caring for more than 6 children, it sounds like the parent won't be able to claim their expenses and if they try to the IRS would be alerted.

I am not 100% positive as reading the IRS site is as easy as reading a upside down and backwards but bottom line is you could end up in some really big legal trouble.

I'd research getting licensed and start the process.
The faster you become legal the less trouble you might face.

You are correct. If you are in violation of your state child care licensing rules and care for more than 6 children, parents cannot claim the child care tax credit.

[Unregistered]

Yikes... I agree with Cat Herder.

That is pretty risky considering the fine for operating illegally in CA is up to $200 PER day PER child and could be a felony charge.

If a parent, neighbor or anyone withi this info reports you, you could be facing enormous legal issues as CA is one of the strictest states in prosecuting illegal care providers.

https://www.berkeleyparentsnetwork.o...ed%20operation.

I went and did a bit of reading on the IRS site and apparently if you are operating illegally and caring for more than 6 children, it sounds like the parent won't be able to claim their expenses and if they try to the IRS would be alerted.

I am not 100% positive as reading the IRS site is as easy as reading a upside down and backwards but bottom line is you could end up in some really big legal trouble.

I'd research getting licensed and start the process.
The faster you become legal the less trouble you might face.

So for more information, I took over the after school care program for a school. Originally I thought that I was license exempt, but the more I looked into it, I don't think that I am exempt. I just found this out last week, and immediately began the licensing process. I really didn't want to do anything illegal, but now I am beyond terrified that I'm going to face serious problems.

[Cat Herder]

So for more information, I took over the after school care program for a school. Originally I thought that I was license exempt, but the more I looked into it, I don't think that I am exempt. I just found this out last week, and immediately began the licensing process. I really didn't want to do anything illegal, but now I am beyond terrified that I'm going to face serious problems.

If you call your local CCR&R now and ask for technical assistance, they will walk you through it. Probably even give you grant money and supplies. You won't be in any trouble. It will only be a problem if they find you, first. Most times, even if they find you, if you are willing to work with them, they gladly help you. They are not in it to prosecute, they want safe places for children in their community. It's the ones who know better they prosecute. https://rrnetwork.org/

[Cat Herder]

Here is the direct contact info. Sorry, it took me a minute to find it for you. Don't be scared. They will help.

https://rrnetwork.org/assets/general-files/Member_Directory_updated_April_2019.pdf

[Unregistered]

Here is the direct contact info. Sorry, it took me a minute to find it for you. Don't be scared. They will help.

https://rrnetwork.org/assets/general...April_2019.pdf

Thank you for the info. I have worked at this school, running their after school program for 4 years now as an employee, ( so we were license exempt) and they were kind enough to let me start my own business and run it on my own, and now I'm running into all this info that I wasn't previously aware of. I'm trying to do everything as legally as I can.

[Cat Herder]

Thank you for the info. I have worked at this school, running their after school program for 4 years now as an employee, ( so we were license exempt) and they were kind enough to let me start my own business and run it on my own, and now I'm running into all this info that I wasn't previously aware of. I'm trying to do everything as legally as I can.

After school programs have a lot more leeway, anyway. What you now describe is so very different from what you originally posted, to us. When you said illegal provider/14 kids we picture kids laying in some living room floor watching cartoons, eating cheetos and drinking mountain dew for 10-12 hours per day. ::::::

Programs that operate for less than 4 hours and only have kids over 5 are not even required to be licensed, here. They just have to pass a fire/occupancy inspection from the county. Their ratio is 30/2. I think you will be just fine.

Now, I kindof want cheetos....