A child care provider writes:

> Do I need to add up how much I spent on personal food for last year?

You do not need to add up the amount spent on food for yourself and your family, but there remains the question of whether you should save your personal grocery receipts.

Posted on 2010-03-03 00:06:04

I had the opportunity to attend a 4C's of Alameda County child care tax workshop with Tom Copeland this past week.

It remains quite difficult for day care providers to find tax professionals who really understand their tax issues. Even very well trained and experienced CPAs, Enrolled Agents, and other tax preparers are quite unfamiliar with the particular rules that affect you. This can mean lost opportunities for deductions or mistakes that can really hurt you.

Here are some questions that Tom Copeland suggests you ask to gauge whether a tax preparer will handle your tax return correctly:

• Should I depreciate my home?
• Should I depreciate the household furnishings I owned at the time I started the business?
• Can I count the hours I work in my home when the day care children are not present?
• Is there a limit to the amount of such hours (when children are not present)?
• Can I claim an exclusive business-use room, as well as regular-use rooms? (Regular-use means space with both business and personal use.)

Here's a question that I would add:

• Will I receive copies of all the depreciation schedules with my copy of the completed tax return?

Posted on 2010-02-27 00:20:52

There are certain tax preparers out there who may advise you not to depreciate your home, if you own it. They may have good intentions, or they may just not want to do the work, but this is bad advice. I suggest that you find another preparer if you get this recommendation.

Home depreciation allows you to take a tax deduction based on the cost or value of the building portion your home (whichever was lower when you started your child care business). This is not optional. The IRS treats depreciation as "allowed or allowable," meaning that whether you take the deduction or not, they will assume that you did.

Posted on 2010-02-26 23:58:35

I want to give you an important tip:

Be sure you get all the depreciation schedules with your tax return.

If you prepare your own tax return, print and save them. If you have your tax return professionally prepared, be sure the preparer prints this information with your copy of the tax return. Many do not.

I recommend that you ask about depreciation schedules before you agree to work with a particular tax preparer. Find out if all the schedules (both for regular tax and Alternative Minimum Tax purposes--more on this later) will be included with your copy of the tax return. If not, find someone else to work with.

This is a strong suggestion, but having the depreciation schedules in your possession is very important and certain tax professionals consider them to be privileged work papers which they don't have to provide. Many others just don't print them out of habit or because they know it will be hard for you to switch preparers without them. Either way, you lose.

"Depreciation" is a big word that intimidates many taxpayers, but it's really a simple concept. Read on for further explanation.

Posted on 2010-02-25 00:14:48

In a follow-up to her previous question regarding outdoor space, the child care provider continues:

> Thank you for answering my question about yard space so quickly. Your answer does make sense. Now my question is about deducting utilities...the kids use lots of water outside (water tables, water fights, etc) a good 6 months out of the year, so I feel that that would deduct as a business expense? How does that factor in if the formula for utilities is only based off of the actual space used in the house? On a side note: I passed your answer about square footage along to my friends in child care who do count yard space in their time/space formula. One of my friends said her accountant actually came out and measured her house, backyard, and front drive for her taxes?? He said that it was because during business hours that space is used by the kids and parents?

You are not required to use your time/space percentage for all of your shared expenses, if that percentage does not accurately reflect actual business use. I have another client who says that a much greater percentage of her total water usage goes to child care activities than would be allowed with the time/space percentage. She came up with another percentage and you can do that, too, but you must have some documentation to back it up.

Posted on 2010-02-23 00:10:37

A child care provider writes:

> In your child care tax return checklist and packet it says to take home space measurements, NOT outside measurements. Everyone I know in child care measures and deducts based on both inside and outside space used for child care. I was wondering why you do not ask for the outside information? We have a large backyard with a nice play structure, sandbox, water tables, patio area, etc., and the kids use that outside space just as much as the indoor space. It seems such waste to not ask to claim that space for child care. Just wondering why you do not deduct it???? Please let me know if I am misunderstanding something.

This is a fairly common misunderstanding. The space measurements are used to calculate your time/space percentage. This percentage determines how much of your home expenses, such as rent or mortgage interest, utilities, building depreciation, etc., you can deduct as a business expense. It is meant to indicate the percentage of your home that is used for business purposes and that means the structure only. Yard space does not affect your time/space percentage.

Posted on 2010-02-21 19:55:54

A child care provider writes:

> I have a few volunteers in which I would like to give them thank you gifts through the year to say thank you for helping me in my childcare. I was wondering if there is a limit to doing this and where I would put it under expenses.

This is a potentially thorny issue. The trouble with giving these folks gifts, is that it could be interpreted as wages. This is because they are doing employee work for free and when employers give gifts to employees (cash or otherwise), it is considered taxable compensation.

Posted on 2010-02-19 16:23:24

First a caveat: I work with family child care providers and this article concerns parents hiring babysitters in their homes. Such folks are "household employers." Day care providers are NOT household employers. Though they work out of their homes, they are business owners and are categorized as "commercial employers." Family child care providers can find employment tax guidance in my Payroll Tax Guide article.

A parent writes:

> I am getting different opinions on my situation from tax companies. Is there anyway you can help. I have a college girl come in my house and she watches my son for about 3 hours a day. However she is not in school right now and doesn't have any other job. To be honest I just wanted to do it under the table, but she is filing what she made, which was $3,800. Should I do a 1099, or do I make a W-2 for her? I am very confused. H&R block told me I had to get a federal id number and give her a w-2 and pay her Medicare and social security taxes. I am really overwhelmed right now with all this and just want to get it over with.

H & R Block is correct. You are a household employer. At least that's somewhat easier than being a regular employer. You can file a form with your regular income tax return to pay the federal payroll taxes.

Posted on 2010-02-18 00:54:06

Not many child care providers (nor many tax preparers) seem to know that when using meal rates to calculate your food deduction for income tax purposes, your choice will affect restaurant meals, as well as meals served at home.

Count the heads of daycare children when taking them out to eat, if you are using the meal rate method. If you are using the standard meal allowance rates to calculate your income tax deduction for meals served at home, then you must also use the meal rates for day care children's meals eaten at restaurants. (This has nothing to do with food program meal counts or reimbursements. This rule only affects your income tax return food deduction.) If you want to deduct the actual cost of kids' restaurant meals, then you must deduct the actual cost of groceries for at-home meals. Your choice can change from year to year, but for any given year, you must use either the meal rate method or the actual grocery cost method for both meals served at home and those eaten in restaurants.

Posted on 2010-02-07 22:54:32

A parent writes:

> My son's child care provider has refused to give me her tax id number. I have terminated care because I suspect she is commiting tax fraud. How do I get her number to claim on my taxes?

Give the child care provider an IRS Form W-10, Dependent Care Provider's Identification and Certification, which she is required by law to fill out and return to you. You can tell her that the penalty for not providing the information requested on the W-10 is $50.

Posted on 2010-02-05 13:26:18

A family child care provider writes:

> I am a family daycare provider. One of my clients has given me a 1099-Misc for 2009. I have never dealt with this before and am not sure if this is even legal. His wife worked 6 months last year but I had her son in my daycare all of last year and her daughter for 6 months. He is a contractor. It looks to me like he wants to write daycare off as a business expense. Is this legal?

The good news is that you do not have to be concerned with what your client might or might not be doing. Daycare is not generally a legitimate business expense, but it won't affect you, no matter what he does.

Posted on 2010-02-04 14:35:11

A day care provider's business percentage on Line 7 of Form 8829, Expenses for Business Use of Your Home, determines how much of her home expenses can be treated as a business tax deduction. It is often called the time/space percentage, because of the unique way the business percentage is calculated for family child care businesses, with a time component and a space component.

Boosting your time/space percentage can mean money in your pocket. The main way to increase your percentage is by keeping good track of time worked in the home and identifying all space used for business purposes. Having an exclusive-use child care room – used 100% of the time for business purposes all year – can significantly increase your business percentage.

Posted on 2010-01-31 00:58:50

If you have a room in your home that you used all year for child care business purposes, and never for personal purposes, you will have a significantly higher business percentage on Line 7 of Form 8829, Expenses for Business Use of Your Home, as a result.

Posted on 2010-01-31 00:57:01

I just made an interesting observation regarding these new energy credits that will work to the disadvantage of family child care providers:

• The Nonbusiness Energy Property Credit - equal to 30% of the cost of certain qualifying improvements, up to a maximum of $1,500 (for 2009 and 2010 combined)
• The Residential Energy Efficient Property Credit - equal to 30% of other qualifying improvements, but it goes through 2016 and doesn't have the $1,500 cap

Both credits apply only to the taxpayer's main home and not to business property or rental real estate.

Here's the nasty bit from the Form 5695 instructions that will reduce these credits for most child care providers:

If less than 80% of the use of an item is for nonbusiness [meaning personal] purposes, only that portion of the costs that are allocable to the nonbusiness [personal] use can be used to determine the credits.

Put another way, if the business percentage for your home business is higher than 20%, you will not be able to take the maximum credits.

Posted on 2010-01-29 00:55:55

A child care provider writes:

> I have a friend who does daycare and has hired her mom and sister. They have both been working part-time since June, and she has been paying them both cash ($10hr). Last time she hired them her tax accountant said she could 1099 them. Is this because they are family members, or should she be paying payroll taxes? Any help would be appreciated. I told her I'm almost sure she should be taking out payroll taxes. If so, how does she correct this problem?

Thanks for contacting me. I don't know why an accountant would have recommended preparing 1099s for these workers. You are correct that they are employees and that payroll taxes apply.

There are some special rules for family employees which could apply to her mother (not her sister, though) and reduce the taxes somewhat, but payroll tax returns must still be filed and she needs to give her employees W-2s at tax time.

The time to get caught up on payroll paperwork is before the deadlines at the end of January and definitely before W-2s must be sent to the Social Security Administration at the end of February.

Because she hasn't withheld any taxes from the payments made to her helpers, this provider will have to pay both the employee and employer payroll taxes, unless she can get her mother and sister to pay back the amounts that should have been withheld for social security, Medicare and state disability insurance.

Posted on 2010-01-23 19:57:20

Press Release, Fremont, CA – January 5, 2010 Family child care providers have it harder than most taxpayers, with a daunting array of records to collect and organize, all while caring for children up to 12 hours per day. Figuring out how the numbers go onto the tax forms is no easy task either, especially given the special tax rules which apply only to day care businesses. The Community Child Care Council (4C’s) of Alameda County, a non-profit agency which offers technical assistance, resources and training to child care providers, sponsors tax and record keeping workshops at this time of year to help providers make sense of it all.

Linda Bringman, Training Coordinator at 4C’s, is pleased to have veteran instructor Tom Copeland scheduled for two workshops this February: “Hiring Practices in the Family Child Care Business” on February 18 in Hayward and “Taxes & Record Keeping Update for 2009” on February 23 in Fremont. Copeland, an attorney, has been a strong advocate for family child care providers since 1981, often interfacing with the Internal Revenue Service on their behalf, proposing new rules to benefit their businesses, and assisting with audits. He is the author of numerous child care business and tax publications. “It's ten below right now with a foot of snow on the ground, so I'm already looking forward to returning to California!,” says the Minnesota resident.

Posted on 2010-01-08 17:16:37

All family child care providers owe it to themselves to learn as much as they can about record-keeping and taxes. You are in the best position to look out for your own best interests. I expect my clients to be a partner in preparing an advantageous and accurate income tax return. To get the best result, we have to work together.

The Redleaf Press publications by Tom Copeland JD are your most valuable resource. Tom is an attorney who has been a strong advocate for family child care providers since 1981, often interfacing with the Internal Revenue Service on their behalf, proposing new rules to benefit their businesses, and assisting with audits. He is the author of numerous child care business and tax publications. Reading his books and taking his courses is a great way to educate yourself and will help you work together with a tax preparer to get the best result on your tax return.

Besides these publications, I highly recommend Minute Menu Kids Pro software to help make record-keeping and tax time easier.

Posted on 2010-01-08 16:26:38

A daycare helper writes:

>I have come across your website and I must say I wish I saw this website about 1.5 yrs ago! I worked for a woman who has been employing her "helpers" as independent contractors. After reading your website I now know that she is in the wrong. My dilemma here is that she is my friend and I don't know how to tell her. My husband wants me to file the proper forms for being misclassified. I want to do what is right but I feel stuck between a rock and a hard place!

You say that you "worked" for this woman. Does that mean you are no longer working for her? If that's the case, I would probably call this a case of "water under bridge" and leave it alone. It's not like anything bad can happen to you by going along with the independent contractor classification. You pay somewhat higher taxes that way, but it could save your friendship.

Posted on 2010-01-03 15:05:29

Written by Tom Copeland for Resources for Child Caring, November 2008

All signs point to a coming recession in the US. This is bad news for everyone, including family child care providers.

When our economy slows down, parents are laid off work and often stay home to care for their children, thus reducing the demand for child care services. At the same time, some of these parents will start offering child care in their own homes to earn more income for their families. The supply of child care increases while the demand for care decreases, making it difficult for providers to fill their spaces.

I've been hearing from providers across the country who are losing parents from their programs. Economists expect that unemployment will continue to rise in 2009. If so, providers may continue to experience difficulties in maintaining their enrollment.

Posted on 2010-01-02 16:36:01

A parent writes:

>I pay an individual to babysit my 3yr old child outside my home and pay by personal check each week so that i may work. She has provided me with a background check but refuses to give me her social security number for tax purposes. Can I send a 1099-misc or do I send a w-2? Is it possible to send either form without her social security number?

You can't do anything without the caregiver's social security number, but because the child care is taking place outside of your home, I don't think you need to worry about the 1099-MISC independent contractor form or the W-2 employee form.

Posted on 2009-12-19 20:51:54

IR-2009-119, December 17, 2009

WASHINGTON — The Internal Revenue Service today reminds individual taxpayers who are considering buying a new car that they have until December 31 to take advantage of a tax break that may not be around in 2010.

Taxpayers who buy a qualifying new motor vehicle this year after February 16 can deduct the state or local sales or excise taxes they paid on the first $49,500 of the purchase price. Qualifying motor vehicles include new passenger automobiles, light trucks, motorcycles, and motor homes.

IRS YouTube Video: English - Spanish - ASL

Posted on 2009-12-18 11:00:27

A family child care provider writes:

>I know you do not complete daycare taxes for non-California residents, but could you recommend a good way to find one locally? I live in Charlotte, NC and while yes there are a slew of accountants and tax preparers, instinctively I have not been satisfied.

We are opting not to use our tax guy of a few years. He's made some really big mistakes for our personal taxes. I do not feel comfortable giving him our business taxes, too. Any help you provide is surely appreciated!

I commend you for trusting your instincts and changing tax preparers. Have you read my article entitled How to Find a Tax Preparer?

It has a link to the Redleaf Institute tax preparer directory. Preparers in that directory have not been vetted in any way, but they do have an interest in working with child care providers. I haven't looked to see how many there are from North Carolina.

Posted on 2009-12-14 20:39:27

A family child care provider writes:

>If I purchase a large vehicle (suv/van) for child care business transportation, can I write it off as a business expense?

Yes, you can. That's the simple answer. It's more complicated than that, of course.

The amount of your deduction will depend on how many actual business miles you drive versus personal miles. If you use the van only for business driving, then you can deduct 100% of all your expenses. If you also use it for personal driving, that percentage will be lower.

You have the choice of deducting actual costs or using the standard mileage rate. If you use the standard mileage rate, you can also deduct any auto loan interest, DMV personal property taxes, bridge tolls, and parking fees. When deducting actual costs, you need to save all receipts for gas, repairs, insurance, car wash, etc.

Posted on 2009-12-08 17:35:45

A family child care provider writes:

> I am about to start scanning in all my business receipts and need to create folders/categories for them. As long as I'm setting it up, I'd like to do it right. Do you have a list of the categories you would like my expenses listed under? (cleaning supplies, office expenses, etc.) I can keep doing them as I did in the past, but not sure if that is exactly how you would like them. Thanks in advance for any advice you can give!

Posted on 2009-12-01 22:58:49

Use this great trick from the Bottom Line Personal Newsletter (where I read about Magda Havas and her work on the biological effects of environmental contaminants) to determine if your microwave oven leaks radiation:

Put your cell phone inside the microwave oven and close the door (do NOT turn on the microwave). Call the cell phone number. If you hear the phone ring, the cell phone signal was able to pass through the walls of the oven--meaning that microwaves are able to pass out.

Posted on 2009-11-25 15:00:46

Back in September, I warned clients to ignore the glut of e-mails being sent with the title "Notice of Underreported Income" and seeming to come from the Internal Revenue Service (IRS).

Now I'm receiving multiple e-mail messages seemingly from the Social Security Administration (SSA) with titles like this:

Watch for errors on your Social Security statement
Review your annual Social Security statement

I don't really blame those who accidentally click on the links contained in these messages, because they look quite legitimate. The senders are counting on the fact that a good percentage of us will click on the link before engaging our brains.

BE AMONG THOSE WHO THINK FIRST AND REMEMBER:

Government agencies do NOT send out notices or other unsolicited messages by email.

Government agencies will NOT ask you to follow links in messages.

ALWAYS BE SUSPICIOUS if you receive unsolicited e-mail from the SSA or the IRS or any other entity (such as your bank or credit card company).

Posted on 2009-11-23 17:45:23

Day care providers with helpers are generally using some kind of payroll service. Or they may be avoiding payroll issues altogether and improperly giving their worker a 1099. A few have taken on the payroll paperwork themselves. (Read my Payroll Tax Guide to see what that entails.)

In many cases, however, providers are dissatisfied. Services generally charge too much. It's worrisome to neglect the proper paperwork, but taking on the payroll tasks is time consuming.

Over the last several years I have encouraged many family child care providers to treat their helpers properly as employees, but I have not found a satisfactory payroll service to recommend.

For this reason, I launched my own daycare-specific payroll tax service for California providers on January 1, 2010.

Posted on 2009-11-21 23:08:12

I recommend you watch this video:

Cell Phones & Cigarettes: What do they have in common?

In 8-minutes it presents some of the health effects associated with cell phone use especially by young people and pregnant women. It also draws on similarities between cigarette smoking and cell phone use. A must-see for teenagers and parents......and child care providers.

It was produced by Magda Havas, PhD, Professor of Environmental and Resource Studies at Trent University in Canada.

Posted on 2009-11-20 15:46:28

Some of you already have a website for your business. For those child care providers still thinking about it, please heed this advice:

Stop by GoDaddy.com (a low cost registrar) right now and do a domain search on your business name.

If your business is "Harriet's Happy Kids," type "harrietshappykids" into the domain search box and see what comes up. Hopefully, harrietshappykids.com is available, in which case I urge you to waste no time in buying the domain before someone else does. Even if you don't need it now, it's worth $10-$15 per year to secure the rights to your business domain name. Otherwise, beware of the domain troll. He could be lurking under a bridge near you!

The domain troll caught up with me and this is my cautionary tale.

Posted on 2009-11-18 22:49:07

From working with family child care providers, I know that many of you host events where food and/or entertainment is provided.

The question is whether all of the costs associated with such parties are deductible on your income tax return.

The answer is, "It depends."

I'm not talking about parties you have for day care kids during business hours, which are always 100% deductible.

My comments concern evening and weekend gatherings for the kids and their families, in which case the guest list can determine how much of your costs are allowed on your tax return as an expense.

Posted on 2009-11-16 23:01:24

Persons you pay to come into your home and work in your family child care business are almost always your employees. It doesn't matter how few hours they work. They are employees whether you hire them for one day, one week or an entire year. Full time, part time, it doesn't matter.

The only circumstance where a person helping you care for children is not your employee is if this person is in the business of providing substitute care. Such a person should be advertising to the public, give you a tax id number, provide services to multiple child care providers, and have a business contract for you to sign. You should also receive an invoice or bill.

Posted on 2009-11-16 20:10:36

See my estimated tax article for further information.

2010 Estimated Tax Due Dates

First Quarter: April 15, 2010
Second Quarter: June 15, 2010
Third Quarter: September 15, 2010
Fourth Quarter: January 18, 2011

Posted on 2009-11-11 23:03:06

Wage earners have taxes withheld from their paychecks. Child care providers and other self-employed persons with a positive income are required to make estimated tax payments. Otherwise, an underpayment penalty may show up on your income tax return, which is calculated on Form 2210 (instructions).

To avoid the underpayment penalty, you generally must make quarterly payments during the year. Total payments must equal the lesser of 100% of your total federal tax for the prior year or 90% of what you actually end up owing for the current year. This is why they call it "estimated tax." You estimate what you will owe and send it in. Or you can fall back on the "safe harbor rule" and calculate payments based on your prior year federal tax. (Note that for higher income taxpayers - generally above $150,000 - the safe harbor percentage goes up to 110% of the prior year tax.)

This is not necessary to make estimated tax payments if you expect your business to show a loss for the year--meaning that you expect your business expenses to be greater than your child care income.

Married providers can avoid making payments if their spouse has enough income tax withheld from his paycheck to cover their joint income tax.

If you haven't made any payments yet this year or have missed payments, it's never too late to catch up and at least pay something.

Posted on 2009-11-11 22:35:48

This article is courtesy of Resources for Child Caring.

Related article on this site: Hire Your Children for the Summer and Small Business Payroll Tax Guide

Many providers take advantage of the tax benefits of hiring their own children to work for their business. The wages paid to your own children can be deducted as a business expense. If your child is under age 18, these wages are not subject to Social Security/Medicare taxes, and your child doesn't have to report earnings on their tax return unless they make more than $5,350. (Wages paid to spouses or children age 18 or older are subject to Social Security taxes and must be reported as income on the person's tax return.)

When hiring your own children, you can pay them to do work for your business, but you cannot pay them to do personal household chores. What is the difference?

A recent US Tax Court case shed light on this question.

Posted on 2009-11-03 19:12:17

In my household, we were just this morning discussing the huge quantity of spam email we have lately been receiving that looks like it comes from the Internal Revenue Service. Then I checked my mail and found an inquiry on this very subject from a suspicious client. Always be suspicious if you receive unsolicited e-mail from the IRS or any other entity (such as your bank or credit card company).

The Internal Revenue Service now has an official YouTube channel featuring videos produced by the IRS on various tax topics.

Click here to see a short video on the subject of tax scams.

Posted on 2009-09-17 00:26:09

A family child care provider writes:

>I am thinking of doing daycare out of my home for one family in Minnesota. I would like to know if I need to be licensed in order to claim expenses as deductions on my taxes?

I am only familiar with licensing rules in California, so I don't know if Minnesota requires you to be licensed when caring for the children of only one family. You should find out, because the answer will affect your tax deductions. California does not require a license in this situation.

Posted on 2009-08-31 15:32:25

A family child care provider writes:

>The meal credit rates for home daycares shown on your web site are through June, 2009. When do you think the July 1 ones will be available?

I just checked and the July 1, 2009 rates have been released on the USDA website. I have now incorporated the new rates in my Standard Meal Rates for Family Child Care Providers article.

The new rates are effective immediately for food program reimbursements.

For income tax purposes, the July 1, 2009 rates just released will apply to 2010 tax returns. The July 1, 2008 rates apply to 2009 tax returns

Posted on 2009-07-28 14:43:08

The husband of a potential family child care provider writes:

>I hold an H-1b visa working at a biotech company. My wife and I are in the process of green card application. Our I-140 has been approved and now are waiting for I-485. My wife now holds an H-4 visa and she only has an ITIN. My question is: Is it illegal for her to start a family daycare? If not her, how about me? What's the best option for us?

I am no expert when it comes to immigration/visa questions, but I went to Google and pulled up this page:

http://answers.google.com/answers/threadview/id/605159.html

Posted on 2009-07-14 23:56:25

The First-Time Homebuyer Credit is still available for homes purchased through November 30, 2009. This year's credit is a true credit. (The 2008 credit was really loan paid back over 15 years.) It's also "refundable," which means the credit is treated like a tax payment. Therefore, even if you have no tax liability, you will get a refund equal to the amount of the credit (up to $8,000).

If you purchase a home in 2009, the credit equals the lesser of 10 percent of the purchase price of the home or $8,000 ($4,000 if married filing separately). However, if your income is too high, you may lose some or all of the credit because it is phased-out when your modified adjusted gross income is between $75,000 and $95,000 ($150,000 and $170,000 if married filing jointly).

Posted on 2009-06-30 00:02:18

The Consumer Assistance to Recycle and Save Act of 2009 authorizes the issuance of an electronic voucher to offset the purchase price or lease price for a qualifying new fuel efficient vehicle upon the surrender of an eligible trade-in vehicle to a dealer participating in the program. Receive a $3,500 credit when you trade a car rated at 18 miles per gallon or less for a new car rated at 22 mpg or more. You will get $4,500 if the replacement gets at least 10 mpg more than your old vehicle. To qualify, your trade-in must be a 1984 or newer model that's in drivable condition. Also, you must have owned and insured it for at least one year prior to trading it in.

Posted on 2009-06-29 23:54:26

For 2009 and 2010, you can claim a refundable Making Work Pay Credit if you are employed. The amount of the credit equals the lesser of 6.2 percent of your earned income or $400 ($800 if married filing jointly). However, the credit is phased-out when your modified adjusted gross income is between $75,000 and $95,000 ($150,000 and $190,000 if married filing jointly).

Posted on 2009-06-29 21:42:52

All or part of your unemployment benefits received in 2009 will be tax-free under the American Recovery and Reinvestment Act.

Posted on 2009-06-29 21:37:59

The Hope Credit, which was a tax credit available for tuition expenses paid during the first two years of college, has been expanded and renamed the American Opportunity Tax Credit for 2009 and 2010.

Taxpayers can now claim up to $2,500 per student, per year for the first four years of post-secondary education. This is much better than the Lifetime Learning Credit, which is limited to $2,000 per return, per year for all eligible students. You cannot claim both credits for the same student in the same year, so you must choose one or the other.

Posted on 2009-06-29 21:36:07

There is a new deduction for state or local sales tax imposed on new motor vehicles purchased after February 17, 2009, and before 2010.

Posted on 2009-06-26 18:22:55

There are benefits to hiring family members to work in your sole proprietor business and many daycare providers take advantage of this. If your children are under the age of 18, you are not required to withhold social security and Medicare taxes from their wages. You are also not required to pay federal unemployment taxes (FUTA) on their wages until they reach the age of 21. Spouse and parent employees are also exempt from FUTA, but you must withhold social security and Medicare taxes.

You do have to follow the normal payroll rules, file payroll tax returns and withhold income tax. And you must prepare a Form W-2 for your family employee at the end of the year.

Posted on 2009-06-26 18:16:35

Required minimum distributions (RMDs) from qualified plans [i.e., 401(k), 403(b), 457(b), etc.] and IRAs have been waived for 2009 only. Thus, you do not have to take an RMD for 2009 if you are the account owner or a beneficiary. If you already withdrew your RMD for 2009, you may be able to roll it over to an eligible retirement plan within 60 days.

Posted on 2009-06-26 18:12:33

The Nonbusiness Energy Property Credit for energy-efficient improvements to your principal residence was not available in 2008. However, it’s back again for two more years in 2009 and 2010.

The credit equals 30 percent of the amount paid for:
• Qualified energy efficiency improvements (i.e., insulation, windows & doors, metal/asphalt roofs, etc.); and
• Residential energy property expenditures (i.e., central air conditioners, natural gas furnaces, tankless water heaters, biomass fuel stoves, etc.).

This credit is available for existing homes only and is limited to $1,500.

Posted on 2009-06-26 18:09:33

In addition to the energy credit for home improvements, you can claim a Residential Energy Efficient Property Credit equal to 30% of the cost for property that uses solar energy to generate electricity or heat water for your residence. You can also claim this credit for property that uses a wind turbine to generate electricity in your residence, or equipment that uses the ground or ground water to heat your home.

This credit is available for existing homes and new construction through 2016 with no upper limit, except as noted later in this article.

The following property qualifies for the credit:
• Solar electric property;
• Solar water heating property;
• Fuel cell property;
• Small wind energy property; and
• Geothermal heat pump property.

Posted on 2009-06-26 18:06:47

A family child care provider writes:

>Would you mind telling us the best software to purchase for our daycare business? We would like to keep our records better than last year.

Better record-keeping is a great goal. It's one of the most straightforward ways to reduce the income and self-employment tax you pay and keep more of your hard-earned dollars. You may earn a higher hourly rate working on your bookkeeping than you do caring for children!

Posted on 2009-06-23 17:20:58

A family child care provider writes:

>My husband is no longer working and does not have medical insurance coverage. We are in the process of getting a family plan through Kaiser, through the business. My question is do we need sign up for a HSA (Health Savings Account) or can we get a regular family plan not under a business plan? I want to make sure I sign up for the right one, so that we will be able to write off the cost on our taxes. Please advise.

Actually, I don't expect that you will be able to get a health plan under the business name.  My understanding is that Kaiser business health plans require something like 3 full time employees (and I assume that other insurers have similar restrictions). 

Posted on 2009-05-08 12:11:39

A family child care provider writes:

> It has come up in discussion on my providers list that a provider can pay her child to do daycare tasks and then use that payment as a write-off. Is this true?

For instance....if I have my son keep a notebook of mileage and trips for me, and I pay him to do this task, can I use that as a write off? Currently he has always helped me clean up after daycare and helps clean the toys and such, and I do pay him for this. Can any of it be claimed?

Yes, it is quite permissible to hire your child and deduct the payments as a business expense, but there is some criteria to fulfill.

Posted on 2009-04-17 16:14:03

The husband of a family child care provider writes:

 > My wife started babysitting in 2008. She works out of our home, the kids are dropped off and picked up by their parents at our home. She babysits for two separate families, they each have two children under 5 years old, and they are here at different times of the day. Her total income was $1325. This is her only job. How do I report this on our 1040? We file MFJ.

Filing a tax return for a self-employed child care provider is actually pretty complicated.  I hope that perhaps you have perused some of the information on my website, including my Letter to New Providers.

Posted on 2009-04-17 12:33:05

Monday, February 23, 2009:

Enrolled Agent Alison T. Jacks appeared before a live audience on "The View from the Bay," a daily afternoon variety show produced in the San Francisco studios of KGO-TV, a local ABC network affiliate.

Long-time consumer reporter, Michael Finney, asked her questions about the Child and Dependent Care Credit, treating babysitters as employees, and the expense deduction for teachers and other kindergarten through 12th grade educators.

Posted on 2009-02-25 15:23:44

A babysitter in West Virginia writes:

> I was babysitting in the children's home for 16 weeks and got paid $4,100. I have asked the mother for a W-2 and she says she doesn't have to give me either a W-2 or a 1099 because I was just a babysitter. She set the hours and I worked in her home... how do I file my taxes?

Posted on 2009-02-02 00:20:52

A family child care provider writes:

> Although I did not receive my childcare license until this year, I purchased many items and supplies last year. I don't want to miss out on these deductions. I also earned a little money caring for two children while their mom attended college courses.

Posted on 2009-01-28 16:00:36

A family child care provider writes:

> My partner and I are both on the license. I am trying to figure out the home (rental) space measurements. Do we split the square footage in half??

It sounds like you are running a home-based child care with a partner. Unfortunately, this is a difficult situation tax-wise.

Is the child care operating in your home? If so, you get to take the home deductions. The partner who does not live in the home cannot share in that. You can't split the square footage. (See my note at the end of this article if you and your partner both live in the home.)

I recommend against running a child care business as partners and instead having the provider living in the home and treat the other provider as an employee. You might want to consider this.

Posted on 2009-01-28 13:33:14

A family child care provider writes:

> We rent, but we rent from my grandmother so we are basically allowed to do any renovations that we want at our own expense. I have some expenses that we incurred when we landscaped our backyard and am not sure where to categorize those expenses (trips to the dump, rental of heavy equipment)?

Even though you rent, you can have home repair/maintenance expenses and home improvement expenses and the trick is to differentiate between the two. Anything that is a major project (e.g. construction, landscaping) or a brand new installation (e.g. water heater, dishwasher) is an improvement. Anything that fixes an existing installation (e.g. plumbing repairs, painting, annual flower bed plantings) is considered a repair or maintenance expense.

Posted on 2009-01-26 17:51:15

> Is a business auto any auto used for business purposes (grocery etc)? We own 2 cars. I have taken both cars at different times to do business related shopping, however, I did not keep records on what outings I took what car. Is that a problem? I also did not write down what our mileage at the beginning of 08 was for either of the vehicles. Any suggestions? Is that a problem when figuring our mileage deductions?

Posted on 2009-01-26 17:28:04

A family child care provider writes:

> Can you please tell me two things? Are we required by law to submit a statement to parents with a TOTAL for their taxes? If so where do I find the law? I heard the only regulation was to provide your ID number. Also, if the parent owes me money and did not follow the rules of the signed contract, can I withhold the statement until their account is paid in full? Is this legal?

Posted on 2009-01-24 13:08:58

A family child care provider writes:

> Maybe you could help me with finding workers' comp insurance. I have offers from $1000 per year and this is much too much for a part-time helper that maybe earns about $2400 per year. Maybe you have another home child care provider who has experience with this?

Posted on 2009-01-23 15:21:49

A family child care provider writes:

> Just wondering what form to give my parents who have paid for child care so they can do their taxes!

Posted on 2009-01-21 22:22:19

A family child care provider writes:

> I am interested in your services. I would be filing separately from my spouse since he is employed outside the home.

Posted on 2009-01-13 11:44:58

If you're a business owner (or landlord), you must give a Form 1099-MISC to any independent contractors you paid $600 or more for services provided to your business (or rental property) during the year. And you must do this by January 31. If it's February already, don't despair, follow these special February instructions immediately. If you have a home office for tax purposes, I recommend that you also give 1099s to any home service providers paid $600 or more.

Sending 1099s is not optional. They are mandatory, unless the service provider is a corporate entity. If your service provider happens to be an attorney, however, then a 1099 is always required, whether the attorney's business is incorporated or not.

Preparing and filing a 1099-MISC protects your business tax deduction. If you neglect to prepare a 1099 and later get audited, your deduction of the fees paid to the service provider will automatically be disallowed. That's a potentially hefty and immediate increase in tax for you, plus interest and penalties.

Important: 1099s cannot be used for workers who should properly be treated as your employees (and note that day care workers are almost always employees). You must provide them with a Form W-2 instead. Refer to the IRS website for help in determining how to treat your workers: Independent Contractors vs Employees.

If you need payroll forms guidance, refer to my Small Business Payroll Tax Guide.

To find out how easy it is to prepare your own 1099-MISC forms, read on.

Posted on 2009-01-04 17:22:05

1099s are supposed to be sent to recipients no later than January 31, but the true deadline is February 28. That is the deadline for mailing your 1099s to the IRS.

Read my main article on 1099 preparation to see how simple it is, but pay attention to the pointers in this article if you are preparing the forms in February.

Posted on 2009-01-04 17:19:55

As stated in the Frequently Asked Questions on the website of the California Division of Workers' Compensation, California law requires employers to have workers' compensation insurance if they have even one employee. The same is true for most other states. What's truly scary are the fines imposed on employers without coverage.

I'm almost sorry to give you the details, but keep reading. It's better to hear this in advance of a problem. The good news is that you probably can find reasonably priced coverage if you need it.

Posted on 2009-01-03 14:31:23

As part of the IRS’ new program to step up enforcement, they are going to start contacting taxpayers directly via telephone calls if they have a question, are preparing to audit the taxpayer, or are engaging in collection activity against the taxpayer. Like the cop show where the cops are hoping that the suspect doesn’t “lawyer up,” the IRS also hopes that a taxpayer whom they wish to speak to does not have representation. Unfortunately, they are not required to give the equivalent of the Miranda warning like the cops of TV. Be aware that you are never required to speak to any employee of the IRS in the absence of an administrative summons (more on the next page). There is no law or statute which requires you to do so. Please be aware of the following rights you have.

Posted on 2009-01-03 01:15:42

This colorful two-page document highlights the most important record keeping chores for child care providers and contains tips to prepare you for tax time, let you pay the lowest tax and help you avoid audit problems.

Click here to download - Day Care Record Keeping 101.pdf
(Document may take a minute or more to download)

Contact me with your name and mailing address if you are a California family child care provider and I will send you a two-sided hard copy. California Family Child Care Associations, Resource and Referral Services and other organizations serving child care providers are welcome to request larger quantities for distribution.

Posted on 2008-12-29 20:31:05

Rates effective January 1 through December 31, 2010:

• 50 cents per mile for business miles driven
• 16.5 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

If you need the correct mileage rate for your 2009 taxes, read more on the next page.

Posted on 2008-12-03 20:45:36

The Internal Revenue Services seems to be responding to the grim realities of the federal budget by auditing more taxpayers and especially sole proprietors and home businesses. This is not good news for family child care providers and other small business owners.

If you receive a notice from the IRS or your state tax authorities, remember this: It is quite likely that some or all of the proposed tax return changes are incorrect. Many notices are generated by computer and often they take away legitimate business deductions.

Quick action in responding to a notice is the best way to protect yourself against paying additional tax. If you receive a notice from the IRS or the California Franchise Tax Board, do not ignore it!

Posted on 2008-11-13 22:51:06

As a family child care provider, your home is your workplace. Hundreds of items all through your residence are used in your business. Furnishings and room decor contribute to the home care environment that parents have chosen for their children.

Doing a household inventory allows you to take a business deduction for furniture, appliances, and other items used in your business. I strongly urge all new child care providers to take such an inventory. Most established providers can also benefit from taking an inventory, as long as your business start date is not too far in the past and you can still remember what you owned at that time.

Posted on 2008-11-13 22:46:34

As we approach the end of the year, some parents will present their child care provider with a holiday gift. If the gift is an item (flowers, book, plant, etc.), this does not need to be reported as income. If the gift is in the form of cash or a gift card, it does need to be reported as income. You can include the cash or gift card as part of the parent child care payment, or you can list it separately as Other Income.

This C-K Kids Tip is courtesy of Newslink from Resources for Child Caring. Note that it applies equally well to client/customer gifts received by other small business owners.

Posted on 2008-11-13 22:37:17

A Newslink update from Tom Copeland

Update: The Economic Stimulus package passed in February extended this rule (enacted for 2008) to cover 2009 business purchases. Remember that you must purchase the item new (not used) and begin using it in your business by December 31, 2009 to qualify for the income tax deduction.

Child care providers and other business owners who buy items in 2009 may be eligible for a special 50% depreciation allowance. This allowance allows providers to deduct 50% of the business portion of the item in 2009 and depreciate the remaining 50%, thus creating a much higher business deduction this year.

Property that is eligible for this special allowance includes: computers, office equipment, furniture, appliances, play equipment, fences, driveways, and a car. The purchase of home improvements or a home does not qualify. The item must be purchased new in calendar year 2009 and used in your business this year. The purchase of a used item does not qualify.

Posted on 2008-11-13 22:29:41

Family child care providers are no strangers to licensing issues and it can be daunting for those starting out in business. The array of licensing and registrations required can be quite confusing. Let's review and clear up any misconceptions about social service licensing, local business licenses, fictitious business names and IRS tax id numbers.

Posted on 2008-11-10 18:08:12

Persons you pay to come into your home and work in your family child care business are almost always your employees. It doesn't matter how few hours they work.

They are employees whether you hire them for one day, one week or an entire year. Full time, part time, it doesn't matter. Independent contractor situations are rare for daycare providers.

Even if it's late in the year, it's not too late to get caught up on the proper employer paperwork and eliminate the audit risk that exists when deducting non-employee helper payments on your income tax return. Contact me for help. You have until the end of January (or possibly February) to provide your employees with a Form W-2.

Check out our Affordable Payroll Service especially for day care providers.

- - -

If you feel tempted to treat your worker as an independent contractor when you shouldn't, read on to learn how this can come back to bite you.

Posted on 2008-11-10 15:55:52

The Internal Revenue Service announced pension and Individual Retirement Account cost-of-living increases for 2010 on October 15, 2009, but SURPRISE! Nothing has changed from 2009 levels. The cost-of-living index for the third quarter of 2009 is LESS than the cost-of-living index for the third quarter of 2008. By law, pension limitations cannot be reduced, so they remain the same for another year.

Here is the full text of IR-2009-94: IRS Announces Pension Plan Limitations for 2010.

Posted on 2008-10-20 23:41:55

August 2008

What are the tax consequences of buying a building to store your extra day care equipment, supplies, furniture, etc.? If you used the building to store items used 100% for your business, then you can deduct 100% of the cost of the building. This would include mortgage interest, property tax, utilities, repairs, insurance, and depreciation of the cost of the building. (If you simply rented space from a commercial storage company, you could deduct 100% of the cost of the rent.) If you stored items that were used by your family as well as your business, you could deduct a portion of the cost of the building (or rent). The business portion would be based on your Time-Space Percentage.

www.resourcesforchildcaring.org

Posted on 2008-08-15 14:16:23

August 2008

One of the most important record keeping tasks you can do is to track the hours you are spending on business activities in your home. This includes the hours you are spending caring for children as well as other hours you spend on business activities after the children are gone such as cleaning, activity preparation, meal preparation, parent interviews, etc. You should be maintaining careful daily attendance records in the "Attendance" section of the software.

Posted on 2008-08-15 14:12:40

Standard Meal Allowance Rates for 2009 income tax returns
(in the continental U.S.)

$1.17 for each breakfast
$2.18 for each lunch or supper
$0.65 for each snack (up to 3 per day)

Alaska Meal Rates
Hawaii Meal Rates

Meal rates for other years are shown at the end of this article.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Accurate meal and attendance records must be kept when using the standard meal rates.

Click here to download the 2010 Redleaf Calendar-Keeper Meal Form
Click here if you still need the 2009 Meal Form

Family child care providers may deduct actual grocery cost as a business expense on their income tax return or you may use the standard meal rates provided in this article to calculate your food deduction. Using the standard meal rates is easier and safer, in case of an audit. If you have records showing attendance and meals served, the IRS will not contest a food deduction based on the standard rates.

Posted on 2008-08-14 16:04:40

For general information about using standard meal rates to calculate your food deduction, see my main article on meal rates.

This post provides the special rates that apply to family child care providers in Alaska.

Posted on 2008-08-14 16:00:24

For general information about using standard meal rates to calculate your food deduction, see my main article on meal rates.

This post provides the special rates that apply to family child care providers in Hawaii.

Posted on 2008-08-14 15:36:50

[1] If you haven't yet filed a tax return to get your stimulus payment, you still have time to do so. You must file by Oct. 15 to get your payment this year. If you've already filed but have a question or issue, visit the IRS Stimulus Payment answer page.

[2] Keep separate track of business miles driven in the first half of 2008 and miles driven in the second half of the year. For business miles driven from Jan. 1 through June 30, 2008, the standard mileage rate for the use of a car (including vans, pickups, or panel trucks) is 50.5 cents per mile. The IRS raised the rate to 58.5 cents per mile effective July 1.

[3] Last year I wrote of the tax complications facing California Registered Domestic Partners, including the fact that they must file single federal tax returns and a joint state tax return. These same complications now apply to California same-sex married couples. Before marrying or registering a domestic partnership, I recommend that all couples receive competent legal and tax advice. This is especially true for same-sex couples, because lack of agreement between federal and state law creates many thorny issues.

[4] Are you planning on making any substantial gifts? Talk to your tax advisor first. Gifts with values exceeding $12,000 must be reported to the IRS.

[5] Not only will you save money at the pump if you buy a hybrid vehicle, you may be eligible for a credit on your income tax return. Note, however, that the credit is no longer available for certain vehicles, including the popular Toyota Prius. Check the IRS Alternative Motor Vehicle Credit page to see which vehicles still qualify.

Posted on 2008-08-14 00:37:30

When you are liable for a loan but can’t repay it, some lenders will forgive the debt. What many borrowers don’t realize is that this cancellation of debt (COD) often results in taxable COD income in the year of forgiveness. The lender usually will issue a Form 1099-C to report the cancelled debt. If you receive one, don’t ignore it. Be sure to give it to your tax preparer and discuss the circumstances surrounding the loan.

If you have cancelled debt but are bankrupt or insolvent, you may exclude the income on your tax return. To prove insolvency, you must show that your liabilities exceeded the fair market value of your assets immediately before the debt discharge. The amount of forgiven debt that can be excluded cannot be more than the amount your liabilities exceeded the value of your assets.

Posted on 2008-08-14 00:36:16

On July 30, 2008, President Bush signed into law a housing bill aimed at providing mortgage relief for more than 400,000 US homeowners facing foreclosure, primarily by allowing them to refinance high-interest, adjustable-rate mortgages, or ARMs, into less expensive fixed-rate loans backed by the Federal Housing Administration. Certain provisions will limit the number of homeowners who qualify, including a requirement that lenders write down loans to no more than 90 percent of a home's value. The program starts Oct. 1 and ends Sept. 30, 2011.

Posted on 2008-08-14 00:34:36

The federal housing bill just passed contains mostly provisions designed to help taxpayers. Here's one which does the opposite.

Currently, taxpayers are allowed to exclude up to $250,000 ($500,000 on a joint return) of gain from the sale of their principal residence. Generally, you must own and occupy the residence for at least two of the five years preceding the date of sale. A reduced exclusion is permitted for taxpayers who meet certain unforeseen circumstances.

Under the new law, taxpayers will not be allowed to exclude any gain attributable to a "nonqualified use." A period of nonqualified use is any period after January 1, 2009 during which the property is not used as the principal residence of the taxpayer, the taxpayer's spouse, or former spouse.

Posted on 2008-08-14 00:32:52

Just because the stock market lost money doesn’t mean you have a deductible loss. As long as you hold on to an investment, you only have a loss on paper. It’s only when you actually sell the investment that you have a transaction to report on your tax return.

Fortunately, the tax law allows you to offset your capital gains by your capital losses. You can avoid or minimize taxable gain by selling two investments, one at a gain and the other at a loss.

Posted on 2008-08-14 00:31:14

At some point, taxpayers who have a traditional IRA may wish to convert it to a Roth. Roth IRAs are more flexible in that there are no required minimum distributions when the owner reaches age 70½. In addition, qualified distributions from a Roth IRA are not taxable.

Under current tax law, in the year you convert a traditional IRA to a Roth IRA, you must recognize the amount converted as income on your tax return, with the exception of any basis that may be in the traditional IRA. Depending on the amount, this can significantly impact your tax return. It can even bump you up into a higher tax bracket.

New legislation may make it worthwhile to hold off converting your IRA. For conversions made in 2010 only, the income from these conversions may be included in income over the two-year period beginning in 2011. For example, let’s say you convert a traditional IRA worth $40,000 to a Roth during 2010. You won’t need to report the conversion on your 2010 return, unless you elect to. Your 2011 and 2012 returns will each include $20,000 of income from the conversion.

Posted on 2008-08-14 00:29:32

If you have a high-deductible health plan, you are eligible to open a Health Savings Account (HSA). Amounts contributed are deductible for all taxpayers (even those taking the standard deduction) and funds may be withdrawn tax-free to cover out-of-pocket medical expenses, including deductibles (but not premium payments). If you open your account part way through the year, you can still contribute the calendar year maximum for a full tax deduction.

Read on for the contribution limits for tax years 2007 through 2010.

Posted on 2008-05-28 17:00:04

I am an Enrolled Agent in private practice since 1995 in Fremont, California. My first job out of college was as a software engineer, followed by some years when I stayed at home with my two sons. I am now a self-employed tax professional working with family child care providers all over California from my home office in the San Francisco Bay Area.

Enrolled Agents have been tested and licensed by the Department of the Treasury. We prepare tax returns and also represent taxpayers before the Internal Revenue Service. If you receive a notice or are audited by the IRS, my Enrolled Agent credential allows me to work directly with IRS personnel on your behalf to resolve things in the best possible way for you.

I specialize in working with family child care providers because I enjoy it and because people in your profession have a need for specialized care. Most tax professionals (even experienced ones) are unfamiliar with the nuances of day care taxes. I see many tax returns with both large and small errors that cause the provider to pay more tax than she should or leave her in a risky position in case of an audit. In the beginning, I started out with a number of child care providers as clients. Now I restrict new business to family child care providers only.

Please read on for some pointers that will help you get off on the right foot with your record keeping and be ready for tax time.

Posted on 2008-05-06 00:10:37

Posted on 2008-03-25 23:39:16

If you're a day care provider and other home business owner, you may not think you hired any independent contractors, but what about your lawn service? Your window washer? Your handyman? Or the guy who shovels your driveway?

These folks aren't providing services directly to your business, but they do indirectly, if you are taking a home office deduction. If you want to deduct a percentage of what you pay them on your tax return, I recommend that you give a 1099-MISC to any home service provider you paid at least $600 to over the course of the year.

Posted on 2008-02-02 23:31:05

Is your tax preparer familiar with child care tax rules?

The fact of the matter is that there are not nearly enough tax professionals out there with a good understanding of child care taxes. If you are a child care provider looking for help at tax time, this can be very frustrating.

I work with child care providers all over my home state of California, so if you also call California home, feel free to contact me. I am located in the San Francisco Bay Area city of Fremont and I have family child care clients up and down the state, from Santa Rosa to Stockton, from Paso Robles to Bakersfield, from Los Angeles to Orange County.

Many people are initially surprised at the idea of working with a tax person located many miles away, but it is amazingly easy. In fact, I never see a good number of my local clients! They find it much easier to send me their information via US mail, fax or email.

This article was written to help out-of-state child care providers, as well as California providers who prefer to find a tax professional in their local area.

Posted on 2008-01-31 16:36:55

October 2007

If a parent leaves owing you money, you cannot deduct this as a business expense. You can't deduct what you don't get, but your taxable income for the year will be lower.

A "bad debt" is only deductible if you previously reported the money as income. So if you reported as income $100 that a parent paid to you in December and then the check bounced in January, you could deduct the expense in January.

www.redleafinstitute.org

Posted on 2007-10-04 01:11:10

RNI's October 2007 Newslink Newsletter

A large percentage of sole proprietors underestimated their income and overestimated their business deductions, resulting in over $93 billion dollars in unpaid taxes for 2001.

This is the conclusion of a July 2007 report, "Tax Gap: A Strategy for Reducing the Gap Should Income Options for Addressing Sole Proprietor Noncompliance" issued by the Government Accounting Office for the US Senate.

This fact is probably behind the increase in IRS audits of family child care providers and is likely to continue.

Posted on 2007-10-04 01:06:41

Are you a day care provider considering incorporating your business for increased liability protection? If so, please review the following two-part discussion of this topic by Tom Copeland of the Resources for Child Caring. Once you do, I think you see that the increased costs to you, and especially the loss of your home-related expenses as a deduction on Form 8829, Expenses for Business Use of Your Home, are huge drawbacks. If you decide to proceed with incorporation, get the advice of a tax professional and a legal professional well versed in the business of family child care. Note that I do not recommend setting up a family child care business as a partnership either.

As an alternative to setting up a corporation, Tom also hits on the fact that a Limited Liability Company (LLC) is another business entity available to child care providers. The amount of such additional liability protection provided by an LLC is unclear, as Tom explains below. Still, I believe it is a better and simpler option than incorporating, as long as the provider is the sole member of the LLC. Do not make your spouse or anyone else a member. Only you, the business owner.

As far as tax reporting is concerned, a single-member LLC still functions as a sole proprietorship. The provider continues to report her business income on a Schedule C attached to her individual income tax return. In California, she also must file a shortened version of Form 568, Limited Liability Return of Income and pay an $800 LLC tax to the state annually. California also has an annual LLC Fee, starting at $900, which most day care providers are unlikely pay. It does not kick in until gross day care income (meaning parent and subsidy income without considering expenses) hits $250,000.

If a family child care business is structured as an LLC with more than one member, things get much more complicated. An LLC with multiple members generally functions as a partnership for tax purposes. This requires an expensive business tax return to be prepared every year and may cause the provider to lose her home-related deductions. Multiple-member LLCs can also make an election to be taxed as a corporation, but that brings us right back to the drawbacks covered by Tom Copeland below.......

August 2007
Resources for Child Caring Tax Preparer Update

TO INCORPORATE OR NOT?

I attended a roundtable meeting this week sponsored by the IRS and spoke with an attorney who assists with businesses who want to incorporate. He told me that all family child care providers should be incorporated, a sentiment that I have heard repeated by other attorneys.

Is this good advice?

Providers do get some personal liability protection if they incorporate, but incorporation does not protect business assets. In a typical situation, a provider might have a Time-Space Percentage of 40%, which means that 40% of their home is not protected if they incorporate. (The same would go for all household furniture and appliances.) When I pointed this out, the lawyer responded that a provider could have their corporation pay the provider rent and thus shield their home from a lawsuit.

This answer brings up a problem I see in the general discussion of whether or not it makes sense for a provider to incorporate. Lawyers understand the legal implications of incorporating, but not necessarily the tax consequences. Tax professionals understand the tax consequences of incorporating, but not necessarily the legal issues.

In this case, the lawyer doesn't realize that it will cost the provider more money if her corporation pays her rent. Let's look at an example.

Let's say that a provider who is a sole proprietor has $30,000 of Schedule C income and $15,000 of Schedule C deductions (food, toys, supplies, etc.). She is also entitled to deduct $5,000 of house related expenses on her Form 8829. Her total business expenses are therefore $20,000, and her Schedule C profit is $10,000. If she is in the 30% tax bracket (15% federal income tax and 15% Social Security tax), her taxes are $3,000 and her take home pay is $7,000.

Now, what happens if she incorporates and the corporation pays $5,000 rent to her and deducts this rent as a business expense? The corporation still has $20,000 of expenses, and if all the profit is reported by the provider as income, the provider still ends up with $7,000 at the end of the year. But now she must report $5,000 as income on Schedule E and pay 15% federal income tax (or $750) on this amount. So it has cost the provider $750 to pay herself rent.

Note: The provider can't claim any home office deductions as an employee of the corporation if she is not using any rooms on an "exclusive" basis for her landlord business. Only family child care providers can use the "regular use" test when deducting expenses for using their home in a business. If the provider was using one or more rooms in her home exclusively for her business, then she would be limited to deducting only the business portion of her mortgage interest and property taxes. Such home office expenses would be taken as a miscellaneous itemized deduction on Schedule A. [Note from Alison: Tom admits this is incorrect in Part Two below. Even home-related expenses for exclusive-use rooms are lost.]

In this example, we have left out the possible tax benefits of incorporating and shielding some of the income from Social Security taxes. But these tax benefits are not automatic and carry with them their own costs (higher tax preparation fees for a corporation). Incorporating also carries other costs (fees to incorporate, possible annual corporate fees, workers' compensation, etc.).

In summary, whether to incorporate or not is a complicated question that needs the input from both a lawyer and a tax professional.

September 2007
Resources for Child Caring Tax Preparer Update

TO INCORPORATE OR NOT? PART 2

Following my last month's email update on incorporation, I received several comments from tax professionals that I want to respond to:

Tom Jemison, an Enrolled Agent in California, wrote, "I think the home office deductions are even worse than what you spelled out. If an employer (the corporation) pays rent for a portion of an employee's (provider's) residence, the employee is not allowed the corresponding deduction for business use of the home - period [IRC 280(A)(c)(6)]. That means not even for an exclusive use area. This comes up a lot for small non-provider corps."

This is true, and my previous email was not accurate on this point. When an employee rents her home to her employer, the employee (family child care provider) cannot claim any home office deduction on Schedule E (or Form 8829), even if the provider is using one or more rooms in her home exclusively for business. The homeowner can still claim mortgage interest and property taxes on Schedule A. The only time a person can claim home office expenses on Schedule E is when the homeowner is renting her home to someone who is not her employer.

Tom also pointed out that there is a tax benefit for a C-Corporation paying rent to a family child care provider employee. Although there is no home office deduction benefit, there is the tax benefit of moving income to a Schedule E where no payroll taxes are paid. This benefit may be offset some by the lower Social Security earnings for a provider.

Several tax professionals commented that family child care providers could set up a single person LLC (Limited Liability Company) to reduce their personal liability. The advantages of an LLC are that the provider can still file Form 8829 and claim all of the regular home office expenses in the same way that a sole proprietor can. In fact, the tax return of a single person LLC looks no different than a sole proprietor. Therefore, there would be no need for the corporation to pay rent to the provider.

However, although it's probably the least complicated of all corporation entities, there are some drawbacks of a single person LLC. Most states charge annual fees for an LLC; a lawyer should be consulted to set up an LLC properly; the business formalities of an LLC must be followed; and business and personal records must be kept separate.

The biggest benefit of an LLC is the potential for additional personal liability protection. After consulting with other lawyers on this point, I am somewhat skeptical that this is true to the extent that providers may think. The LLC is a relatively new business entity, and we don't have much in the way of court rulings to determine how well it will protect the owner. The part of the home that is used for business purposes would not be protected from a lawsuit; the same is true for furniture and appliances used in the business. Because many providers struggle to keep business records in a professional manner, I am also concerned that those who form an LLC would fail to follow all of the record keeping requirements of an LLC and therefore would risk losing the corporate protection in a lawsuit.

My advice is for providers to purchase a lot of professional business liability insurance (at least $1 million per occurrence and $2 million aggregate). Although an LLC may indeed provide some additional personal liability protection, I don't believe it is a simple solution to this problem.

That's the final word from Tom Copeland on this issue.

Last updated: 9 March 2010

Posted on 2007-09-28 14:47:43

National Association of Tax Professionals (NATP) Appleton, WI – With children and teachers back in school, the National Association of Tax Professionals (NATP) reminds educators, parents, and students that the IRS has various education-related deductions and credits that can benefit them when filing their 2007 federal income tax return.

Posted on 2007-09-24 22:30:04

This document lists the information that I ask my day care clients to provide at tax time:

Click here to download - Child_Care_Tax_Return_Checklist.pdf


Last updated 28 January 2009

Posted on 2007-09-11 22:12:46

Self-employed business owners, including day care providers, need an Employer Identification Number (EIN) if they have employees. Day care providers, with or without employees, have another reason to obtain this tax id number for their business: IDENTITY THEFT PREVENTION.

We're getting close to the end of the year when parents will be requesting your tax id number for the purpose to claiming the federal Credit for Child and Dependent Care Expenses. They may even ask you to fill out a Form W-10, Dependent Care Provider's Identification and Certification. (Most parents don't realize this is the official form they should be using.) Many providers give out their social security number, but it is much safer to give parents an EIN.

Not a day care provider? Do you provide other services as a sole proprietor? Anyone ever ask for your social security number or give you a W-9, Request for Taxpayer Identification Number? You, too, should protect your social security number and get an Employer Identification Number. Give your EIN to clients before they prepare their 1099-MISC forms at the end of the year.

Posted on 2007-09-08 20:44:03

August 2007

Although there are hundreds of items that a family child care provider (or other small business owner) can claim as a business expense, not everything is deductible. Here are some items that are considered personal expenses by the IRS and may not be deducted:

* parking or speeding tickets
* the cost of the first phone line into your home
* the cost of personal clothing (children's clothing would be deductible)
* pet care (it may be possible to deduct expenses for animals other than a dog or cat if you can show how they help children learn)
* assessments on your property tax statement (for sidewalks, sewers, or other land improvements)
* mortgage insurance
* the purchase of land

www.redleafinstitute.org

Posted on 2007-08-03 21:40:03

National Association of Tax Professionals (NATP) Appleton, WI – If you wait tables, bus tables, park cars, tend bar, serve cocktails, deliver food, or entertain, and you received $20 or more in tips in any one month – you must report all your tips to your employer. This includes cash tips, charge-card tips, and any tips you get from other employees, minus what you ‘tip out’ or share with colleagues. The IRS requires that federal income tax, social security, Medicare taxes, and, in some cases, state income tax be withheld from income earned through tips.

Posted on 2007-08-03 18:11:56

National Association of Tax Professionals (NATP) Appleton, WI – National Association of Tax Professionals (NATP) Appleton, WI – What is more exasperating than having to pay taxes? Understanding the constantly changing legislation affecting them! Yet, not fully understanding rights and how provisions work together costs taxpayers significantly every year. A mid-year tax review with an expert will help you. Here is why. Following are some common areas fraught with complex rules that cause taxpayers to miss valuable opportunities to leverage their options and lower their tax bills. Financial advisors and tax preparers are experts in these areas so you don’t need to be. Call your tax advisor for your mid-year review soon to discuss your financial plans and learn how you can save on your next tax return.

Posted on 2007-08-01 15:14:41

National Association of Tax Professionals (NATP) Appleton, WI – Fraud perpetrators have found the perfect means to intimidate taxpayers into filling out legitimate-looking, but phony, Internal Revenue Service (IRS) forms – using the threat of government action or loss of tax refunds if you don’t respond. In the latest e-mail scam, consumers have received a “Tax Avoidance Investigation” e-mail claiming to come from the IRS’ “Fraud Department” in which the recipient is asked to complete an “investigation form,” for which there is a link contained in the e-mail. It is believed that clicking on the link may activate a Trojan Horse that has the potential to take over a person’s computer hard drive and allow someone to have remote access to the computer.

Posted on 2007-08-01 15:04:27

July 2007

One of the most important records to track throughout the year is the number of meals and snacks that you serve the children in your care. If you are on the Food Program, keep a copy of your monthly claim form. But you should also be recording on a daily basis the additional meals and snacks you serve for which you are not reimbursed by the Food Program. Such snacks do not have to be nutritious, and you don’t need to keep a menu. Keeping an accurate count of meals and snacks will make a big difference when you deduct food expenses on your tax return using the Standard Meal Allowance. If you serve one un-reimbursed snack to one child per day, this is equal to $150 in food deductions for the year.

www.redleafinstitute.org

Posted on 2007-07-06 17:45:10

Most family child care providers use a full service payroll company to generate paychecks, W-2s, and prepare quarterly payroll tax returns, as well as making payroll tax deposits. Using a payroll company is the best way to go for most small business owners. It can be a headache to deal with the many payroll tax forms yourself (federal and state), especially since the penalties are high when you miss a deadline.

Family Child Care Taxes offers two levels of payroll tax service for California child care providers.

If you feel you have the time, as well as a knack for detail-oriented number crunching and remembering deadlines, you can certainly do all or some of the payroll tax work yourself. Even if you engage a payroll service, you should know enough about payroll taxes to monitor the service you receive. This Federal and California Payroll Tax Guide serves both of these purposes.

Remember, child care workers are almost always employees, so there's no getting around setting up payroll and doing things properly. Visit the IRS website and learn how to distinguish between an employee and an independent contractor. Even very short-time or part-time workers are employees.

California family child care providers must pay their workers an hourly wage of at least the $8.00 per hour California minimum wage (effective January 1, 2008). You cannot pay a flat daily, weekly or monthly amount. Have your workers sign in and out to document hours worked. For information regarding other California labor laws, contact the Division of Labor Standards Enforcement (DLSE) within the Department of Industrial Relations (DIR).

Posted on 2007-07-06 03:15:04

Tom Copeland describes this method in detail in a Resources for Child Caring article.

Payroll taxes for California employers consist of taxes paid by the EMPLOYER:

• Half of social security and Medicare
• State unemployment insurance
• State employer training tax

And taxes paid by the EMPLOYEE:

• The other half of social security and Medicare
• State disability insurance (SDI).

Employers using the method described in this article choose to pay the employee's taxes as well as their own, either by choice or because they failed to withhold the employee taxes shown above from a worker's pay.

Posted on 2007-07-06 03:10:37

Posted on 2007-07-05 00:08:34

Now is a good time to review your record keeping practices since we are in the middle of the year. Your goal is to have a receipt for every item you use in your business: supplies, cleaning supplies, toys, furniture, household items such as toilet paper, light bulbs, detergent, etc.

If you don’t have a receipt for all purchases, take a photograph of the item and write a note describing where you bought it and how much it cost. Estimate if you have to. Save any cancelled check or credit card statement as well. Make a note on the receipt as to whether the item was used 100% for your business or was used partly for business and partly for personal purposes.

Your ability to sort out these two categories on your receipts will make a big difference come tax season because the more items you identify as 100% business instead of shared, the lower your taxes will be.

Posted on 2007-06-20 17:30:43

National Association of Tax Professionals (NATP) Appleton, WI – With the arrival of summer, many of you are packing up and heading to your vacation homes. For some, the time you are not there is an opportunity to make some extra income by renting out your property. The National Association of Tax Professionals (NATP) reminds you that if you receive income from renting your vacation home to others, you may deduct certain expenses. These expenses, which may include interest, taxes, casualty losses, maintenance, utilities, insurance, and depreciation, will reduce the amount of rental income that is taxed.

Posted on 2007-06-19 22:27:01

May 2007

If you buy items at a garage sale, you need to keep an adequate record to deduct it as a business expense.

There are several things you can do: Bring along a sales book for the homeowner to sign. Make out a note of the transaction which states the date, place, item purchased, and amount paid. Take pictures of the items.

If you are hosting your own garage sale, you probably will not have any tax consequences. If you sell items at a loss that you only used personally, you don't have to report the income received. If you sell items at a loss that you used in your business, you could report the business loss as a tax deduction, or not report anything at all. It's unlikely that you'll sell any item at a profit, but if you do, you must report it as income on Schedule D.

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The Internal Revenue Service once again warned taxpayers that identity thieves are not above posing as the IRS in order to trick people into revealing private personal or financial information. Commissioner Everson warned, "Don't be fooled by these shameless scam artists. The IRS doesn't send unsolicited e-mail."

Should you receive a fake IRS e-mail, the IRS asks that you refrain from opening any attachments and forward the message to the following e-mail address: phishing@irs.gov. Those of you interested in the full IRS press release on this topic, please click here. And thanks to a sharp-eyed EA, you may view an actual fraudster e-mail here.

Courtesy of the National Association of Enrolled Agents e@lert newsletter for April 7, 2007.

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Due to recent legislation, the IRS is tightening up rules for charitable contributions. Please read below and learn how to protect your deductions.

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National Association of Tax Professionals (NATP) Appleton, WI – Because having a family member with special needs can be costly, it is particularly important that these families take advantage of all the tax deductions and credits to which they are entitled. Unfortunately, many taxpayers who qualify for these tax breaks are unaware and fail to claim them. Lesser-known tax breaks are hard to keep up with, and even tax preparers who may have limited exposure to these situations can miss them. As a taxpayer, it’s important to be informed.

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Update 7 November 2008: This article was originally posted in December 2006, but teachers have reason to rejoice again. October legislation has extended the teachers' classroom expense deduction retroactive to the start of 2008 and through 2009.

National Association of Tax Professionals (NATP) Appleton, WI – In a victory for teachers who frequently spend their own money on behalf of their students, Congress, in last-minute legislative action before year-end, approved an extension of the $250 tax deduction for teachers who incur expenses out of their own pockets during the 2006 and 2007 tax years. The president added his signature on December 20, 2006.

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NATP Information Release Summary:

--Over half the population now employs the services of a tax preparer; a direct outcome of ever-increasing complexity of tax legislation.

--“Over-the-counter” tax software is only as good as the numbers entered and the understanding of the individual doing the input.

--Tax preparers study year-round to keep up-to-date on the changes, investing significant amounts of time and money.

--To determine what kind of tax preparations services are right for you, here are several things to consider.

--Know the differences between types of preparers (brief descriptions).

--Check references.

--Always be certain that the preparer signs the return.

--Link to receive a free brochure. http://www.natptax.com/2005findataxprobrochure.pdf

Members of the National Association of Tax Professionals (NATP) work at offices that assist over 11 million taxpayers with tax preparation and planning. The average NATP member has been in the tax business for over 20 years and holds a tax/financial designation and/or a college degree. NATP has nearly 18,000 members nationwide. Members include individual tax preparers, enrolled agents, certified public accountants, accountants, attorneys, and financial planners.

Learn more at www.natptax.com.

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This information was released by Tom Copeland at Resources for Child Caring in April 2007:

When the IRS audited family child care provider Kay Gillock last fall, there were two main issues in dispute: how much space in her home did she use in her business, and how many hours did she work in her home. Kay claimed she used 98.87% of the space in her home and worked 84.8 hours per week (50.3%). When the auditor issued his report that allowed only 57.31% of her space and 44.4% of her time, Kay fought back--and won.

The way that Kay responded to the IRS report is a textbook example of how to make a case to the IRS in an audit. With Kay's permission we have made the IRS report, her response to the report, and the IRS letter that conceded these two issues available on our Web site as a downloadable PDF. Family child care providers can learn much from these documents on how to prepare their own audit defenses.

Read the entire article for all the details, but be sure to observe these remarks:

After receiving Kay's letter, the auditor's supervisor issued a new report five months later. A letter accompanying the new report said, "This report is the result of extensive research on the part of the examiner and myself and discussions with Internal Revenue Service District Counsel. As you will see in the report, we have conceded the issues of square footage of the home allowable as business use and the amount of time spent working on your business per day."

In other words, it was reasonable for Kay to use practically all of the rooms in her home for her business, even though she had 3-5 children in care. In addition, Kay's 85 hours of work per week were also deemed to be reasonable. Although her work hours were higher than the average provider she kept careful records to back up her claim. I strongly advise providers to keep at least two months a year of detailed records of the hours worked. The longer the hours you work the more detailed your records should be. Kay's detailed records made a difference in her case.

Although individual audits cannot be used as precedents in other cases, Kay's audit is instructive. The IRS did check with District Counsel, who backed up Kay's position. This gives weight to other providers who take a similar position to Kay's. The IRS did not provide any written authorities to support their bogus claim that it was not necessary for Kay to use all the rooms in her home. Providers and tax professionals should not be afraid to forcefully respond to an audit report with their own additional facts and authorities.

Tom concludes:

I am happy to assist providers and tax preparers with IRS audits. If you need help, please contact me at 800-359-3817 ext 321 or tcopeland AT nafcc.org. [Tom's email address has been obscured to protect him from unwanted spam emails].

Last updated: 5 January 2010

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December 2006

Can you deduct expenses for your dog or cat? The short answer is "no." The IRS views dogs and cats as too personal to be deducted as a business expense. In over 20 years of representing providers in IRS audits, I have never won a deduction for the upkeep of either a dog or cat.

You can deduct the cost of keeping a dog away from the children (fence or leash). In addition, you can deduct the cost of immunization of these pets, but only if your local community does not already require such immunizations for all pet owners.

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National Association of Tax Professionals (NATP) Appleton, WI - Imagine the delight of a young teacher working to complete her master's degree who found out that by filing the 1040 long form tax return instead of the short form, she could receive a $3,000 refund. It's only one example of how itemizing deductions can pay off. When it comes to tax deductions, little things mean a lot. For those who assume they won't qualify, think again. If you keep careful records of your expenses, you may have a delightful surprise coming, just like this young client of NATP tax preparer, Louise Gritmon.

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These rates also apply to Paid Family Leave (PFL).

The SDI rate for 2010 is 1.1% (0.011). The taxable wage limit for 2009 is $93,316 for each employee per calendar year. The maximum amount to withhold for 2010 is $1,026.48.

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National Association of Tax Professionals (NATP) Appleton, WI - What do you get when you team up two unethical CPAs with a millionaire who wants to believe he is exempt from paying taxes? BIG TROUBLE. So go the allegations about actor Wesley Snipes and his tax advisors, Eddie Ray Kahn and Douglas Rosile are just the latest in a long string of schemers attempting tax evasion. Obviously, they should have spent a little more time reading old Dick Tracy comics in which Tracy repeated the FBI slogan, "Crime Does Not Pay."

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Written by Tom Copeland for the Redleaf National Institute's March 2007 Newslink Newsletter:

Although it might seem at first to be a simple matter, the question of whether or not a family child care provider can deduct professional development classes or professional credentials on their income tax return is actually quite complicated.

Classes or workshops that providers take to get ready to care for children are deductible, but classes or workshops that providers are required to take by state law before they can get a state license are not deductible. So if providers take a class on child development before they are licensed, it is deductible. However, if state law says that providers must take a class in child development before they can get licensed, then it's not deductible. If state law says a provider must take 10 hours of training a year after they get licensed, then the cost of classes they take before and after they are licensed are deductible.

(Note from Alison: Tom wasn't kidding about complicated, was he?)

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Everyone who itemizes their deductions should be aware of changes to the charitable tax deduction rules included in the Pension Protection Act of 2006, signed by President Bush in August. I have long thought of charitable giving as one of the last remaining write-offs my clients could count on, but no more. You will have to work harder for your charitable deductions starting immediately.

The details below are abbreviated from a recent National Association of Tax Professionals (NATP) press release. The bulk of the changes can be summed up in a single word: receipts.

Changes regarding cash/monetary contributions (effective 8/17/06)

- You must have a bank record, a receipt, or written communication from the charity or non-profit showing the organization name, date of the contribution, and amount for all contributions of money, regardless of the amount.

Note: Looks like your canceled check is valid proof for donations under $250. Prior law still requires a written acknowledgement for contributions of $250 or more, however. The real pain is that now you must have written acknowledgement for all cash donations, big or small. There goes my deduction for the $5 I gave to the neighor kid for his school walk-a-thon!

Changes regarding noncash contributions (effective 8/17/06)

- You may only donate clothing or household items in good used condition, or better. (Exception for single items of more than $500 value that include a qualified appraisal.)

- The IRS may deny deductions for items of minimal monetary value, such as used socks and undergarments.

Changes regarding food donations (effective 1/1/06)

- Food must be "wholesome" -- intended for human consumption and meeting government quality and labeling standards.

- You must obtain an itemized receipt containing the same information as those needed for cash/monetary contributions mentioned previously.

The changes affect everyone who contributes to charitable organizations at any level. "Church-goers who used to put cash in the collection plate each week must now either write a check or take advantage of the church's envelope system," remarks Jersey City, NJ, NATP tax professional, Robert D. Flach, author of the blog, THE WANDERING TAX PRO.

Sam Grubbs, an enrolled agent and NATP member in Columbus, GA, adds, “Unfortunately, this may negatively impact collections such as the MDA drive over Labor Day weekend by the firefighters. Will you ask the firefighter for a receipt when you drop a dollar in the boot?"

My two cents: "Don't expect to deduct donations to a holiday canned food drive this year, but please give anyway!"

Last updated: 17 October 2006

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Are you accepting new clients?

Yes. I am currently accepting new clients who are California family child care providers. New clients should be email users, as that is my preferred mode of communication and client education (via email newsletters). To file by April 15 or for help requesting an extension, I must receive your tax data no later than March 21.

See my Child Care Tax Return Checklist for the information needed to prepare your income tax return. This information can be provided via email, fax or US Mail. You will need to send me copies of all tax forms (W-2s, 1099s, 1098s, etc.) or else scan the documents and email them securely with a password. I will also need a copy of your prior year income tax return.

If you are a new child care provider or fairly new, please read My Letter to New Family Child Care Providers.

Contact us via email to request a New Client Packet or to request our fax number. (Our fax number is not shown on the website to discourage junk faxes.)

California residents can reach us by phone at 800-616-1268. Others please call 510-745-7275.

What are your fees for tax preparation?

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