Tom C. ~ Question About Unregulated Care

[Heidi]

Hi Tom...

I have always been licensed, but am considering scaling back once my license renewal comes up next year.

What kind of attendance records am I required to keep if I am not regulated? In WI, the state requires a specific form for regulated care, and it's a PITA to remember sometimes.

I'm just wondering what I would need for tax purposes if I am legally unregulated.

I can still take all the same deductions, too, right? Keeping records on income, direct expenses, meals served, and household expenses?

Thanks in advance.

[TomCopeland]

unlicensed

If you are legally unlicensed you should keep the same records, for IRS purposes, as if you were licensed. You can claim the same deductions as a licensed provider. But, you don't have to use the same state forms. For attendance purposes, you should have records showing when children arrive and leave each day.

Legally unlicensed means you are not licensed but are still not illegal under your state child care laws.

If you are operating in violation of state licensing laws then you can't claim house expenses (property tax, mortgage interest, utilities, house insurance, house repairs, house depreciation), but you can claim all other expenses. Therefore, except for house expenses you should still keep the same records regarding attendance, receipts, meal counts, etc.

[Heidi]

Thank you!

[Heidi]

one more...

For meal counts, if you have a written schedule saying that you serve breakfast, lunch, and a dinner, and also have written attendance records, do you need to also have a record of which children ate which meal, or is the attendance record combined with the schedule enough?

[AmyKidsCo]

If you are operating in violation of state licensing laws then you can't claim house expenses (property tax, mortgage interest, utilities, house insurance, house repairs, house depreciation), but you can claim all other expenses. Therefore, except for house expenses you should still keep the same records regarding attendance, receipts, meal counts, etc.

That's really interesting. Does the IRS actually check to see if you're operating legally?

Heidi - why are you considering going unregulated?

[Heidi]

That's really interesting. Does the IRS actually check to see if you're operating legally?

Heidi - why are you considering going unregulated?

Because for most of the time I've been doing childcare (again), since Feb 2011, I have had 3-4 kids in my group. There have been rare times when I had more temporarily.

Between YoungStar, training and education requirements, extra insurance, reams of paperwork, inspections, alarms for my car (if I get a bigger one, which I'd need to do any field trips), always having surprise inspections hanging over me (not a huge deal, mostly an annoyance), and the fact that I compete mostly against illegal care and not-so-great centers, and the fact that NONE of my parents give a hoot about anything other than are their kids loved and cared for...whew!

In my younger years, I wanted to be the "professional" daycare provider with the interest centers , the separate area, the cubbies in the entry, etc.

In the last 2 years, I've almost completed my degree in Early Childhood (before, I had 100's of hours of training, but no formal college-level work). I've learned pretty much nothing that I didn't already know, except a few things that I mostly have no interest in...

I like being "grandma" (a really young grandma), with 3 kiddos (or so) of mixed ages. I like cleaning, laundry, cooking with the kids, teaching them manners, taking them for walks, reading them stories, letting them watch some Sesame Street now and then. I like sitting at my big dining table with them at breakfast and drinking my coffee and chatting, pointing out the birds or squirrels we see, or noticing that it's raining or snowing.

I like being able to use whatever discipline I feel is best (within reason). If a child needs a time out (typically as a last resort), I want to be able to give them that. If a baby is safer in a playpen when I need to use the restroom, I want to be able to him that without being told it's not okay (instructor and licensers both agreed on that).

I HATE writing a curriculum, doing formal assessments, creating portfolios (I'd rather text pictures or put them on Facebook). I am a childcare provider, not a teacher, and not only am I ok with that, but my kids thrive.

whew!

[TomCopeland]

Records

For meal counts, if you have a written schedule saying that you serve breakfast, lunch, and a dinner, and also have written attendance records, do you need to also have a record of which children ate which meal, or is the attendance record combined with the schedule enough?

You should have a record showing what meals/snacks each child was served each day. Just because your contract says you serve a morning snack doesn't necessarily mean you did. If you are eligible to be on the Food Program while not being licensed, your CACFP monthly claim form is the perfect record to show this. You should, however, keep meal records for any meals/snacks that you served which were not reimbursed by the Food Program.

[TomCopeland]

Irs?

That's really interesting. Does the IRS actually check to see if you're operating legally?

Heidi - why are you considering going unregulated?

The IRS doesn't check to see if you are operating legally. But, if you were audited, they will ask to see a copy of your license.

[Heidi]

The IRS doesn't check to see if you are operating legally. But, if you were audited, they will ask to see a copy of your license.

Interesting..

So...hypothetically, they would then disallow any shared deductions for the days when you are over numbers?

For instance, we are allowed 3 children under age 7 in WI. Lets say someone typically has 3, but occasionally helps a friend and takes a 4th as a drop in (lets say their regular daycare was sick).

Technically, they are now "illegal", but how would the IRS know this?

As far as attendance records, before the state had the "approved form", I did not take attendance, but I recorded the kids schedules on my calendar keeper. Not really exact times, rounded basically. If someone got picked up early, I would only change it in my records if it affected the length of my workday. Much less work, and still ok, right?

[AmyKidsCo]

Because for most of the time I've been doing childcare (again), since Feb 2011, I have had 3-4 kids in my group. There have been rare times when I had more temporarily.

Between YoungStar, training and education requirements, extra insurance, reams of paperwork, inspections, alarms for my car (if I get a bigger one, which I'd need to do any field trips), always having surprise inspections hanging over me (not a huge deal, mostly an annoyance), and the fact that I compete mostly against illegal care and not-so-great centers, and the fact that NONE of my parents give a hoot about anything other than are their kids loved and cared for...whew!

In my younger years, I wanted to be the "professional" daycare provider with the interest centers , the separate area, the cubbies in the entry, etc.

In the last 2 years, I've almost completed my degree in Early Childhood (before, I had 100's of hours of training, but no formal college-level work). I've learned pretty much nothing that I didn't already know, except a few things that I mostly have no interest in...

I like being "grandma" (a really young grandma), with 3 kiddos (or so) of mixed ages. I like cleaning, laundry, cooking with the kids, teaching them manners, taking them for walks, reading them stories, letting them watch some Sesame Street now and then. I like sitting at my big dining table with them at breakfast and drinking my coffee and chatting, pointing out the birds or squirrels we see, or noticing that it's raining or snowing.

I like being able to use whatever discipline I feel is best (within reason). If a child needs a time out (typically as a last resort), I want to be able to give them that. If a baby is safer in a playpen when I need to use the restroom, I want to be able to him that without being told it's not okay (instructor and licensers both agreed on that).

I HATE writing a curriculum, doing formal assessments, creating portfolios (I'd rather text pictures or put them on Facebook). I am a childcare provider, not a teacher, and not only am I ok with that, but my kids thrive.

whew!

I've always needed to have more than 3 for financial reasons, but I totally see your point of view. I don't have the same issues because I'm not doing YoungStar (until it's mandatory) and I don't do field trips (both our vehicles are big enough to require an alarm) so neither of those things are issues for me. ITA about hating to do lesson plans, but I like portfolios and assessments.

So, are you really a young grandma, or is that how you see your relationship with the children? I'm curious because I became a grandma at age 40 and now have 3 grandchildren. lovethis

[Heidi]

I've always needed to have more than 3 for financial reasons, but I totally see your point of view. I don't have the same issues because I'm not doing YoungStar (until it's mandatory) and I don't do field trips (both our vehicles are big enough to require an alarm) so neither of those things are issues for me. ITA about hating to do lesson plans, but I like portfolios and assessments.

So, are you really a young grandma, or is that how you see your relationship with the children? I'm curious because I became a grandma at age 40 and now have 3 grandchildren. lovethis

I'm 48, so not too young to be a grandma, although none of my biological children have had babies yet (oldest is 23, but not established enough yet). My husband kindly shares his 6 grandchildren with me, but they all live at least an hour away, so we don't see them often enough.

The most I've ever had here was 7, and that was a few mornings per week. Usually I get calls for babies, and so I am limited to 4, or else I have to call in help to stay within ratios. I was thinking if I raised my infant rate slightly, I could keep it to 3.

A lot of my old daycare kids have needed back-up care on occasion, though, so I'm wondering how I could handle that. If I had 3 on the schedule every day, and then had a 4 or 5 one day here and there, would anyone care?

My license is up for renewal next year, so I am looking ahead, not making any immediate changes.