 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. Please work only with tax professionals who agree to provide copies of all your depreciation schedules. ... Here are the steps you can take: Start looking for a local tax professional at the website of the Resources for Child Caring: RNI Tax Preparer Directory Tax pros in this directory claim to have experience with day care taxes. While you are there, check out this RNI article on Choosing a Tax Preparer. Next I recommend that you look for an Enrolled Agent using the web directory of the National Association of Enrolled Agents: NAEA Enrolled Agent Directory Also try the web directory of the National Association of Tax Professionals: NATP Member Directory NATP is made up of Enrolled Agents, CPAs and other tax professionals. It is not absolutely essential that you work with an Enrolled Agent. You may find a non-EA who specializes in day care taxes. The advantage of working with an Enrolled Agent or a CPA, however, is that if you ever get audited or receive a notice from the IRS, these folks can get a Power of Attorney from you and deal directly with the IRS on your behalf. Other tax professionals can't do this. Other tax pros also have not had to prove their tax knowledge before entering the profession. Enrolled Agents and CPAs must pass a difficult, multi-day-long test to obtain their credential. That said, the fact is that there are a great number of excellent non-EA, non-CPA tax professionals out there . Many have college degrees and years of experience. Unfortunately for you as the consumer, the expertise and professionalism of the various types of tax professionals varies greatly no matter what the credential or none. Interview several tax professionals and do it during the off season, if you can. Ask the questions suggested at the top of this article and any others you can think of. It's important to find someone who communicates and answers your questions. If it is tax time already, you probably won't get an extensive interview before you have to make up your mind. Decide on someone and hope for the best. Remember that you can swithch preparers (during the less busy off season) if you are unhappy with the person you choose. Too many people stick with their tax preparer even when they are dissatisfied. (Sometimes very dissatisfied!) If your gut tells you it is time to change, then do so. Look for a tax preparer who prepares many self-employed home office tax returns every year (ask how many). You may find someone with experience preparing child care tax returns (ask how many per year), but the next best thing is a professional who deals with other types of home business tax returns frequently. It will be your job to know enough to work with the person you choose and educate them on day care tax issues, if necessary. Too many family child care tax returns contain blatant errors that the provider should have detected. Check over your completed tax return carefully. You sign the tax return and you are responsible for its contents. Most importantly, you pay the price if the IRS doesn't like what they see! Use the Family Child Care Tax Companion, Record-Keeping Guide, and other Redleaf Press tax publications to educate yourself. The Tax Companion by Tom Copeland is specifically geared to helping you work with a tax professional and feel confident that they are handling your tax issues correctly. Be sure to attend any tax workshops offered in your area and do it every year, if they are offered. Learning about taxes takes time and repetition. If you are lucky, you will have the opportunity to attend a local tax workshop with Tom Copeland. Tom travels around the country and makes himself available to answer questions from providers, tax professionals and others. If you ever want to double check something your tax preparer is doing and can't find the answer yourself, you can ask Tom by calling 651-280-5991 or sending email to tomcopeland AT live DOT com. Lastly, to emphasize something said earlier, if you are dissatisfied with your tax preparer for any reason, find a new one. Personality mismatch, non-responsive, it doesn't matter why. Listen to your intuition if you feel that it is time to make a change, especially if you suspect that your tax return contains errors. Good luck! It really is important to find a good person to work with on your taxes, someone who will calculate the lowest, correct tax and help you avoid penalties and stay out of trouble with the IRS. You'll have peace of mind today and down the road.
Last updated 30 April 2010
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