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Daycare and Taxes All things related to Taxes and running a Daycare post here. Topics of tax exemptions, forms, filings, tax write offs, IRS etc.

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Old 09-28-2013, 11:17 AM
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LWICD LWICD is offline
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Default Charging Sales Tax

Is it required to charge sales tax or city tax on daycare charges to my parents or are daycare centers exempt from charging sales tax?
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Old 09-29-2013, 03:04 PM
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I didn't want you to think you were being ignored. I'm sure Tom will be around soon to answer. I will give you the info I know. Sales tax is only charged on goods, not labor as far as I know.

So, let's say I went to Sam's and bought a dozen packs of diaper wipes and since I had a tax exempt certificate and intended to resell them, I wouldn't pay tax at Sam's Club. Then, on Monday, I sold each parent a pack of diaper wipes. In that case, I would charge them tax. Sales tax is only paid once, either when I buy it or when I sell it.

In child care, generally you are not receiving money for anything except the labor of caring for kids. You aren't selling goods, so no tax.

I don't pay any type of city tax in my town, and I don't recall hearing it mentioned in any of Tom's books. Don't take this part as gospel though. Just because I've never heard of it doesn't mean some town in Texas isn't doing it. I would be very surprised though.
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Old 09-29-2013, 03:16 PM
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Default sales tax

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Originally Posted by LWICD View Post
Is it required to charge sales tax or city tax on daycare charges to my parents or are daycare centers exempt from charging sales tax?
Sales taxes or city taxes are determined on the local basis (state, city), not on the federal level. I've never heard of providers having to charge sales taxes for their services. To be sure you can contact your state tax agency.
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