Tom Copeland Question

[Unregistered]

Tom,

Regular poster/member, logged out.

Clarification please. If a provider receives money for care, must she claim ALL money received?

You know the $600 rule of not needing to do a W-2? Her plan is to not claim $600 from each parent as income. I think she might be confusing the two.

Thanks.

[NoMoreJuice!]

Actually..

Actually if you make less than $600 as a self-contractor and are issued a 1099, you are not obligated to pay tax on it. A W2 employee must file regardless...even if it's only $1. A schedule C is more difficult, but the rules are still very clear when it comes to claiming income.

The situation you described is illegal. You cannot claim less than the amount the parent paid. Besides, didn't they give the parent a W10 and a year end receipt with the correct amount? When the parent claims the childcare deduction, the IRS will know exactly how much they paid the provider, and it had better match up with the provider's return. Watch out for an audit in the mail if it doesn't. Oh, and penalties. Fun stuff.

[Blackcat31]

Actually if you make less than $600 as a self-contractor and are issued a 1099, you are not obligated to pay tax on it. A W2 employee must file regardless...even if it's only $1. A schedule C is more difficult, but the rules are still very clear when it comes to claiming income.

The situation you described is illegal. You cannot claim less than the amount the parent paid. Besides, didn't they give the parent a W10 and a year end receipt with the correct amount? When the parent claims the childcare deduction, the IRS will know exactly how much they paid the provider, and it had better match up with the provider's return. Watch out for an audit in the mail if it doesn't. Oh, and penalties. Fun stuff.

Providers are not required to give W10's and the W10 has no space for total amount paid in (although some providers DO write the total amount at the top)

Also, my tax statements/returns do NOT state the specific amount each family paid me. They only say how much money I took in as a whole.

Of course, I have records of what each parent pays me but there is nothing I turn into the IRS that they can check against what a parent says they paid unless they request the info specifically.

[NoMoreJuice!]

Hmm...

You are correct, providers are not required to give out W10s.

However, if a parent requests for me to fill out a W10 (which in the past, all of mine have, since they file form 2441) and I refuse, there is a penalty PER dc family. It is a common practice to provide one with a year end receipt for parents to file.

There is a way for an auditor to check a parent's claim against your's--they can do an audit of your entire return against all of your parents' returns. It happened to a provider in my town a few years ago. Returns do get flagged by the IRS' computer system. It is always best to be honest.

[Blackcat31]

You are correct, providers are not required to give out W10s.

However, if a parent requests for me to fill out a W10 (which in the past, all of mine have, since they file form 2441) and I refuse, there is a penalty PER dc family. It is a common practice to provide one with a year end receipt for parents to file.

It is common practice to give parents a W-10 in SOME areas. NOT all providers do this. For some it is the norm and for others, it is simply not something they do.

I was simply pointing out that it isn't a requirement.
It also isn't a requirement to include year end totals.

You are correct about there being a penalty for not filling one out IF the parent asks me too but then parent would have to prove that I refused.

I believe the fine for not complying is $50.

There is a way for an auditor to check a parent's claim against your's--they can do an audit of your entire return against all of your parents' returns. It happened to a provider in my town a few years ago. Returns do get flagged by the IRS' computer system. It is always best to be honest.

I didn't say there wasn't a way for the IRS to check who paid what. (I keep records for that)

I was merely pointing out that providers don't submit statements about what each family pays for child care so it isn't so easy for the IRS to simply cross check info without auditing....kwim?

More info about year-end receipts http://www.tomcopelandblog.com/2011/...-receipts.html

[NoMoreJuice!]

love it!

I love that blog, thanks for posting it! I've never seen it before, and I love that he suggests having the parents sign an end of year receipt for your records; that's something I've never done. I'm all about the CYA part of record keeping!

[Blackcat31]

I love that blog, thanks for posting it! I've never seen it before, and I love that he suggests having the parents sign an end of year receipt for your records; that's something I've never done. I'm all about the CYA part of record keeping!

YES!! I have learned a ton of helpful info from Tom's blog!

I despise the record keeping part of this job on the financial end but LOVE the record keeping for files, documenting and other stuff like that....as long as numbers aren't involved.

I think you can sign up for e-mail alerts to Tom's blog too so that you get notifications of new entries.

[itlw8]

If you post this on the tax forum Tom would see it an answer . Can a Mod move it to the correct place?

[Crazy8]

Don't know answers to the OP's questions, but just wanted to say I've never heard of the W-10 until today and I've been a dc provider for almost 13 years. Never had a parent bring me one or ask me for one. Apparently its not a form they need to file since it says on top its just for their records. I give the info on an end of year statement.

I am of the mindset that my EIN number is getting attached to each families taxes so I better be filing for the same amount that theirs totals. That is why I don't trust them to just say they paid me $150/week for 52 weeks instead of actually figuring out how much they paid me. I give it to them, have them sign and return a copy and then if they claim a different amount at least I know I have myself covered!

[Blackcat31]

Don't know answers to the OP's questions, but just wanted to say I've never heard of the W-10 until today and I've been a dc provider for almost 13 years. Never had a parent bring me one or ask me for one. Apparently its not a form they need to file since it says on top its just for their records. I give the info on an end of year statement.

I am of the mindset that my EIN number is getting attached to each families taxes so I better be filing for the same amount that theirs totals. That is why I don't trust them to just say they paid me $150/week for 52 weeks instead of actually figuring out how much they paid me. I give it to them, have them sign and return a copy and then if they claim a different amount at least I know I have myself covered!

Here is a blank W10 form in case you need one.

http://www.irs.gov/pub/irs-pdf/fw10.pdf

[TomCopeland]

Income

Tom,

Regular poster/member, logged out.

Clarification please. If a provider receives money for care, must she claim ALL money received?

You know the $600 rule of not needing to do a W-2? Her plan is to not claim $600 from each parent as income. I think she might be confusing the two.

Thanks.

A family child care provider is required by law to report as income all money received from parents, even if it's $1.

No exceptions.

The $600 rule has nothing to do with reporting income. The $600 rule says that if you hire an independent contractor and pay a person more than $600 you must file a Form 1099 to report this to the IRS, so the IRS can track to make sure this person reported their income on their taxes. Providers would never issue a Form 1099 for parent income because they received income, rather than paying someone else. Also, when a provider hires someone to help them care for children, this person is almost always an employee, not an independent contractor, so even in this situation there is no filing of Form 1099.

Don’t miss my February 4th webinar “Tax Changes for 2013: How to Avoid Mistakes When Filling Out Your 2013 Tax Forms.” It starts at 9pm Eastern Time and is sponsored by Daycare.com. Register here:http://events.r20.constantcontact.co...&llr=yatrx4cab

[TomCopeland]

income

Actually if you make less than $600 as a self-contractor and are issued a 1099, you are not obligated to pay tax on it. A W2 employee must file regardless...even if it's only $1. A schedule C is more difficult, but the rules are still very clear when it comes to claiming income.

The situation you described is illegal. You cannot claim less than the amount the parent paid. Besides, didn't they give the parent a W10 and a year end receipt with the correct amount? When the parent claims the childcare deduction, the IRS will know exactly how much they paid the provider, and it had better match up with the provider's return. Watch out for an audit in the mail if it doesn't. Oh, and penalties. Fun stuff.

No. If a family child care provider (or any independent contractor) makes less than $600 he or she must still report it as income and pay taxes on it.

Don’t miss my February 4th webinar “Tax Changes for 2013: How to Avoid Mistakes When Filling Out Your 2013 Tax Forms.” It starts at 9pm Eastern Time and is sponsored by Daycare.com. Register here:http://events.r20.constantcontact.co...&llr=yatrx4cab