Split up Parents issue, Paying Childcare and claiming

[daycare]

Hi Tom,

I have a dcf that is Split up, never married. The parents reside in different states and both are fighting over who will get to claim DC expenses for their child on the upcoming taxes. The child lives with the mother 99.9 % of the time.

Right now only the DCM pays me. The father sends her money, not court ordered. She then pays me.

The father was told that the only way he can claim any of the daycare expenses on his taxes is if he pays me directly. The parents want to split the cost of daycare and both be able to claim 50-50% on their taxes. I am not crazy about the idea of having to create two separate accounts and billing two different people for one child and trying to track all of that, but will have to if they are allowed to do it this way to support their claims.

Is this even possible?
Will I have to accept payments from both Parents in order to give credit where due?

How should I handle this. Thanks so much

[Great Beginnings]

Speaking from experience don't allow them to pay separate. Too many issues arise and then you end up without getting paid, wanting to term and mom arguing you can't term and it's not her fault dad didn't pay and she's paid all along etc.... Their breakup should not equal your problem.

[TheGoodLife]

I would tell them I only do 1 receipt per family, and if they needed 2 they would have to pay $20 more a month for the extra administrative time it took (or whatever amount you thought would make it worth your time- $20/week if you really didn't want to )

[Blackcat31]

I am sure Tom will have the right answer but I currently have 2 DCF's that split the deduction for child care expenses on their taxes but I receive payment from only one parent in each situation.

I write out one receipt to the person paying me and include on the memo line that it is payment for Billy Black for care on XX days.

The parents figure out between them how much they are each going to claim.

Why can't DCM give DCD a receipt for the money that DCD gives to her? They can figure out how much each is going to claim and I would think all the dad would need to have for proof of payment is receipts for what he paid mom.

I would not allow myself to be put in the middle of any of this. I give receipts to who paid and that is it. What each family chooses to claim as a deduction and how is on them. I play NO role in that.

[daycare]

I understand what you are saying, but the father believes that he will not get credit for the childcare if he does not pay me directly.

He is saying that he was told this by his cpa and that he needs to make his 50% of the payments to me in order to be able to take the claim.

I have never been in this situation, so I don't really know how to handle it.

[Blackcat31]

I understand what you are saying, but the father believes that he will not get credit for the childcare if he does not pay me directly.

He is saying that he was told this by his cpa and that he needs to make his 50% of the payments to me in order to be able to take the claim.

I have never been in this situation, so I don't really know how to handle it.

Tell him to call the IRS. Have him send you the link as to what he found out.

[Blackcat31]

Plus if your policies state you give one receipt to the parent paying you, why are you even entertaining dad's issues?

This is between DCM and DCD and really has nothing to do with you unless you plan on accommodating dad.

[TwinKristi]

But only one person can claim the child (and from what you're saying it sounds like mom legally is entitled to claim her) so what good would it do to even accept his payments and give them each receipts?
Total rant here but I find it humorous how some men think they should be able to write off any expense towards their child who they don't even live with. Most NC fathers are responsible for providing health insurance, half of OOP medical expenses, half of childcare and child support even if they can't claim the child on their taxes. If the parents make the arrangement to alternate claiming the child (which I find ridiculous if the parent doesn't even have physical visitation or custody of the child) then the mom may lose the ability to claim head of household. There is way to do "status" claiming for cases like this but it's not something easy to do. I've done taxes seasonally for several years on the side and its always stumped me and also raises the audit risk.

[Blackcat31]

But only one person can claim the child (and from what you're saying it sounds like mom legally is entitled to claim her) so what good would it do to even accept his payments and give them each receipts?
Total rant here but I find it humorous how some men think they should be able to write off any expense towards their child who they don't even live with. Most NC fathers are responsible for providing health insurance, half of OOP medical expenses, half of childcare and child support even if they can't claim the child on their taxes. If the parents make the arrangement to alternate claiming the child (which I find ridiculous if the parent doesn't even have physical visitation or custody of the child) then the mom may lose the ability to claim head of household. There is way to do "status" claiming for cases like this but it's not something easy to do. I've done taxes seasonally for several years on the side and its always stumped me and also raises the audit risk.

They aren't arguing over who claims the child as a deduction, they are trying to split the deductions for child care costs.

[TwinKristi]

They aren't arguing over who claims the child as a deduction, they are trying to split the deductions for child care costs.

That's my point... he can't claim ANY of the child's expenses if he doesn't claim the child. So why even entertain the idea?

[Lorri]

It seems to me even if he doesn't pay you he gets to write of what he pays the mom even if she pays the daycare. I only deal with who I contract with. If they are not together and the mom signs the contract then she is the responsible for following all the rules not him. If he doesn't pay a week who would you have to go after the mother or the father? I would say he could say he never signed a contract.

[TwinKristi]

It seems to me even if he doesn't pay you he gets to write of what he pays the mom even if she pays the daycare. I only deal with who I contract with. If they are not together and the mom signs the contract then she is the responsible for following all the rules not him. If he doesn't pay a week who would you have to go after the mother or the father? I would say he could say he never signed a contract.

He wouldn't be able to write off anything which is why he wants to pay directly, but even then he can't claim it. Who knows what the payments is for exactly when he pays mom. Food, had, rent, clothing... It's like saying you can write off child support.

[MarinaVanessa]

That's my point... he can't claim ANY of the child's expenses if he doesn't claim the child. So why even entertain the idea?

I have DCKs where the mom has custody but dad has them a few days out of the week and uses me when his GF can't watch them and he still claims what he spends on DC on his taxes even though he doesn't have custody. DCM has used me before for drop in and paid me directly ... I use minute menu so its easy for me to invoice one parent or the other and each can claim what they each pay.

Maybe Tom can clarify but the chil tax credit and the child care tax credit are two separate things and as far as I know the child tax credit is the only one that only the custodial parent can claim.

OP can you just have the parents alternate payments week to week? Have one parent pay one week and the other the next etc. Then you only have to give them each their own receipt

[TomCopeland]

child care tax credit

Hi Tom,

I have a dcf that is Split up, never married. The parents reside in different states and both are fighting over who will get to claim DC expenses for their child on the upcoming taxes. The child lives with the mother 99.9 % of the time.

Right now only the DCM pays me. The father sends her money, not court ordered. She then pays me.

The father was told that the only way he can claim any of the daycare expenses on his taxes is if he pays me directly. The parents want to split the cost of daycare and both be able to claim 50-50% on their taxes. I am not crazy about the idea of having to create two separate accounts and billing two different people for one child and trying to track all of that, but will have to if they are allowed to do it this way to support their claims.

Is this even possible?
Will I have to accept payments from both Parents in order to give credit where due?

How should I handle this. Thanks so much

You are not required to agree to the parent's request. You can accept separate payments or not. In the end, it's not your business as to which parent is entitled to claim the child care tax credit. The IRS law says that only one parent can claim the credit. That parent must be able to claim the child as a dependent. The child can only be a dependent if she lives with the parent for more than half the year and the parent provides more than half of her living expenses. So, even if you agree with the father, it won't help him. I don't think it's worth trying to argue with him about this. You should decide whether you want to do what they request.

[MarinaVanessa]

You are not required to agree to the parent's request. You can accept separate payments or not. In the end, it's not your business as to which parent is entitled to claim the child care tax credit. The IRS law says that only one parent can claim the credit. That parent must be able to claim the child as a dependent. The child can only be a dependent if she lives with the parent for more than half the year and the parent provides more than half of her living expenses. So, even if you agree with the father, it won't help him. I don't think it's worth trying to argue with him about this. You should decide whether you want to do what they request.

This is great Tom. Thanks for the info. Now what about when parents have their children 50/5? Do neither claim the child and the child care tax credits in that situation since they both have the child 50% of the time and not more?