Parents Left Owing Me Money

[DaycareMama]

If parents left owing me money then come back looking for a year end statement, do I have to give them one? Or can I make them pay me up to date first??

[Abigail]

How long ago did they leave? I would have taken the proper steps to try to get your money from the beginning with giving them a verbal then a written notice and then turn it in to small claims within so-many days. I would not withhold their childcare fees paid in 2010 because they did pay something even though they are not paid up-to-date. This is a good question. I'm not sure if you can mix the two forms together or not.

[TomCopeland]

Parents who want to claim the child care tax credit are supposed to give their caregivers IRS Form W-10 to fill out. Few, if any, parents are doing this. Instead, many providers give the parent a filled out W-10 or give the parent an end-of-year receipt. If you are on good terms with the parent it's a good idea to give the parents a receipt and have them sign it and keep a copy. You can use the W-10 for this purpose if you write the amount they paid you across the top of the form.

If a parent leaves owing you money, however, I would recommend not giving the parent a W-10 and not giving them any end of year receipt until they pay you what they owe you. You are not breaking the law by not giving the parent a W-10 or a receipt. The only time there is a consequence is if the parent gives you a W-10 and you fail to fill it out (the penalty is $50). So, tell the parent no receipt until you receive what's owed you.

[Annette]

If you pay the $50 penalty do you have to give them a receipt for what they paid. I have customer owing $265.

[TomCopeland]

No. If the parent gives you the W-10 and you refuse to fill it out, the IRS could find out and fine you $50. However, this doesn't mean you will be forced to give the parent a receipt for what they paid you. The parent will be able to claim the child care tax credit without your ID# as long as they have made a good faith effort to get your #. Giving a provider the W-10 is an example of a good faith effort, so the parent will get the credit.

[Annette]

The parent already has my tax id. Can they still get a credit without my receipt for what they did pay?

[TomCopeland]

Yes, the parent can claim the child care tax credit without a receipt from you. The parent would have to show records of how much they paid you (cancelled checks) if they were audited.

[Annette]

thanks so much.

[Preschool/daycare teacher]

So if there's a family who is no longer in your care, do providers have to give them a receipt or something telling how much they paid for childcare? They haven't asked for anything, and have not given a w-10 to be filled out yet. So as long as they don't ask, the provider doesn't have to give them anything? I don't know if they have the tax id or not...if they did claim what they paid, but never asked provider for anything, and provider didn't give them anything, would provider still be charged $50 fine for it?

[TomCopeland]

You don't have to give a receipt or give a Form W-10 to a parent who has left your program. If you are on good terms with them you might want to go ahead and do so, but it's not required. If the parent doesn't send you a Form W-10 then you cannot be fined $50 for failing to fill it out.

[Preschool/daycare teacher]

You don't have to give a receipt or give a Form W-10 to a parent who has left your program. If you are on good terms with them you might want to go ahead and do so, but it's not required. If the parent doesn't send you a Form W-10 then you cannot be fined $50 for failing to fill it out.

Thank you! That's a big relief!