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Old 03-07-2018, 10:59 AM
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TomCopeland TomCopeland is offline
Business Author/Trainer
Join Date: Jun 2010
Location: St. Paul, Minnesota
Posts: 3,066
Default state audit

Originally Posted by Country Kids View Post
Hi Tom!

My states revenue department is sending out Child Care Verification Forms to providers to fill out who have clients that pay with cash. Any client that pays with cash-state pay or private.

One of my clients even had their tax preparer mention it and how most of the childcare's will be "audited" meaning having to fill this form out.

Do you have any idea why a state would suddenly start doing this and do you think it would be come a yearly thing?

I'm thinking of starting to do check only if this becomes the case for cash payments.

Also, I have two couples divorced and both dads pay the moms their portion and the moms pay me (contracts are with them). If the dads are giving the mom's cash I'm not going to have to mess with that piece am I since I don't receive the money from them?
The IRS and states recognize that many parents pay with cash and some providers don't keep careful records and report all their income. It could be that the state is auditing parents who claim they are paying more for child care than they really pay. It's hard to say if this means more providers will get audited. As long as you are keeping careful records of parent payments and report it all as income, you will be fine.

You report what the mothers paid you. Get them to sign an annual receipt for the amount they paid you. It's irrelevant what the father paid the mothers.
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