"Under the Table" Payment

[AfterSchoolMom]

No, I'm not talking about myself.


I'm just curious, do you all think that the deeply discounted providers that have flooded the market lately are being paid under the table? I can't imagine charging $70 for the whole week AND paying taxes on the income. Also, I wonder if they have contracts, late fees, etc. CAN they even do that (ie, do they have the right to) if they're not claiming anything?

Just wondering what you all thought.

[wdmmom]

Working under the table for cash is illegal. All income is suppose to be reported. But, you are right...most of the people flooding the childcare market that are charging 1/2 the normal going rate are not claiming it. 9 out of 10 times, these people are SAHM's or people that have been fired/laid-off/unemployed looking for something to do til a new, higher paying gig comes along. The parents that fall into that trap don't end up getting a receipt and most of these people probably quit before year end and never give out their SSN or EIN.

Anymore in this day and age, if you are a provider and you have a family, it benefits you to claim your income as it is for the parent to claim their childcare deduction.

[PeanutsGalore]

Can't parents claim the tax credit even without the SSN? I thought they could...

But I agree, it can truly be to your benefit to claim taxes. Especially if you aren't charging a whole lot per week.

[PitterPatter]

Can't parents claim the tax credit even without the SSN? I thought they could...
But I agree, it can truly be to your benefit to claim taxes. Especially if you aren't charging a whole lot per week.

In my state they have to have the SS#. I give weekly/biweekly reciepts all year round and then a total reciept at the end of the year with all of my info on it and the tax preparers will still call me at home asking for my SS# which I hate to give but I refuse to give it to the clients. In a way I am glad because 2 yrs ago a former client had claimed she paid me $9,000 for the year and she really had only paid me $5500! Had that tax prep not called me and asked for my number she would have gotten away with that and I could have been in trouble for reporting less. She didn't even have her reciepts! I asked the tax prep how much she was claiming and she told me. I told her that was a lie and asked her what the reciepts said. She said she didn't have all of them. So these people can be claiming they paid anything I guess.

[MyAngels]

Years ago, before I even started my daycare, my SIL had a provider who charged less per week than anyone else, with the full agreement of the families in her daycare that they would not, in exchange for the lower rate, claim their child tax credit. I'm sure there are still providers who do it that way. Personally, I'd rather stay on the good side of the IRS, and will pay my taxes to the penny .

[wdmmom]

If you are uncomfortable giving out your SSN, apply for an Employee Identification Number (EIN) through the IRS website. www.irs.gov

It's free and it's a lot safer than using your SSN!

I provide parents a receipt every time they pay and I provide a hard copy with the business name, EIN and total amount paid no later than January 31st each year.

[dEHmom]

the ones who do the under the table are only screwing over themselves. assuming they provide food/snacks/beverages, they don't get to claim back ANYTHING. it is all coming out of the money they are getting paid, and honestly, they aren't walking away with much on paydays if this is how they are operating.
i guess if the parents are providing all food and drinks, sunblock, etc etc, then the provider is making some money, but not much once she covers her overhead.

[Meeko]

If you are uncomfortable giving out your SSN, apply for an Employee Identification Number (EIN) through the IRS website. www.irs.gov

It's free and it's a lot safer than using your SSN!

I provide parents a receipt every time they pay and I provide a hard copy with the business name, EIN and total amount paid no later than January 31st each year.

I will not give out my SSN!! I use a, EIN too.