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I have a dcp who is having a hard time bidding jobs right now, he has money coming in but wants to limit his payments to care. He wants to limit hours at dc and I have agreed to entertain the idea of reducing his fees accordingly. I told him I would need a good way to manage it for tax time though first.
I remember Tom mentioning at a training that the IRS estimates how much you should be reporting at tax time based on cost per week X number of kids X number of weeks open each year.
So, If I reduced his fees, (and do not have an hourly rate for anyone) how do I handle this IF I was to get audited?
He typically pays $540/two weeks for care but I might let him pay $0 for two weeks and the kids would only come for a little bit each day while he bids on jobs or they may not come at all. I would like to still claim them on the FP on the days they are still attending but know that would raise a red flag for the IRS if I was claiming kids and not getting paid for them.
Thanks
I remember Tom mentioning at a training that the IRS estimates how much you should be reporting at tax time based on cost per week X number of kids X number of weeks open each year.
So, If I reduced his fees, (and do not have an hourly rate for anyone) how do I handle this IF I was to get audited?
He typically pays $540/two weeks for care but I might let him pay $0 for two weeks and the kids would only come for a little bit each day while he bids on jobs or they may not come at all. I would like to still claim them on the FP on the days they are still attending but know that would raise a red flag for the IRS if I was claiming kids and not getting paid for them.
Thanks
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