How do you inform parents about tax information.

I have been getting emails from parents telling me.

I am doing my taxes today, I need my end of the year statement from you by the end of the day today or weekend and etc.

What do you tell parents??? What is your policy on this?

BTW I don't give out anything until the end of the month as a courtesy to all of the parents.

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I tell my dcp that I will have their statements by Feb . That is when I have all my accounting and tax info completed . If they need it now then they would have to keep track of their receipts themselves . I also do not give the info out over the phone , I require the parents sign off on the amount they ( and I ) are claiming.

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My handbook says this:

TAX INFORMATION

Provider's EIN will be written on the last receipt of the year for tax purposes.

Should families need a total amount paid over the course of the year, a balance will be provided but will be provided only AFTER the provider's taxes have been completed.

This can be any time before April 15. Should a family require a total balance before that date, it will be the family's responsibility to track these totals as the provider will not make exceptions to this policy.

Once the provider's taxes have been completed, families will be required to sign and date a W-10 form. A copy of this form will be given to each family and another copy will be kept in the child's files.

Duplicates will be provided for a small fee.

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I email everyone a read only PDF that has their total amount paid, when care started and ended for 2014, my EIN number and other pertinent tax info. I just emailed them all out last night.

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love all the information thanks so much for sharing....

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I invested some time to make a ledger that can be copy and pasted into end of year statements, with totals & EIN#. Each family has their own tab in excel. I can also copy and paste it into invoices/receipts. I can total it all up for my tax purposes. I provide monthly receipts (many families have flex spending accounts.) Every payment when made is reported in my ledger. I've already e-mailed out my end of year statements, specifically to not stress me out. In the years past, I've always scrambled and I just made a decision to be more proactive

I like BC's idea to add it to the parent handbook/contract so that each family knows ahead of time they need to be the one to keep track, unless they want to wait. Many of my parents would forget and still ask

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The first week of January I have them sign off on all their payments and then give them a copy.

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I don't mind handing it out, but no one said anything like 'by this date' to me when they very politely asked if we would be letting them know the total.
I had them sign a statement with totals and gave them one I signed just this week, as we got that info together for taxes already anyway.

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BC- I may tweak that and steal it! Great idea to add it to the ever-growing handbook.

I totaled mine and gave out receipts with total an EIN the day after New Years. $5 a copy after that.

Its just easier for me, as I had a parent incorrectly total it herself when she gave me a W10 (and she was an accountant/CPA for a large college!). We spent 30 minutes totaling both of our records after hours one year. She had added in her BONUSES to me as pay, as well as after hours babysitting my daughter had done for her.

I won't even go into how dishonest I thought she was after that. I now want to know that parents are claiming what I ACTUALLY earned.

I don't actually FILE my taxes until Mid March usually.

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What kind of bonuses? Don't we count everything as income? I'm not sure how to count Christmas gifts that I don't know the value of.

Kelly

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I send home info in the January newsletter that I would have their tax documents to them by Jan 16. I just printed off the statement of payments from the Minute Menu program. It is simple and easy.

My parent handbook also states that I will send home tax info in January of each year.

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I could be wrong, but if it is considered a gift and it should not be taxed

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That will make life easier.

Kelly

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this may help

http://www.irs.gov/Businesses/Small-...n-Gift-Taxes#2

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Mine may be a little much, but I've grown accustomed to doing it.
On letterhead I list all payments made throughout the yr, date received, and amount.
Then the total amount paid for the yr, that I will be claiming, with my EIN, license #, and signature, along with a second letter thanking them for being a valued client, and that I'm looking forward to working with their family in the coming yr.
I usually give these letters the first week in January.

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This is what I told one of my fathers last year. I was in my car 1 1/2 hrs away from home and had no way to access my records.

I'm sorry, but lack of planning on your part does not constitute an emergency on mine.

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I gave out completed W-10's this week. I also have them sign that they received it and that they agree to the amount shown.

I was going to mail out 3 that left on good terms, but I won't have their signature saying they received it. Maybe I should email it so I have proof I sent it?

I had one ex dcd text me today asking me to text him his total and my tax #. I will not text that info. So I ended up emailing it to him. I think I'll do that with the others.

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http://www.tomcopelandblog.com/2013/...-holidays.html

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I use the book for record keeping called Forms, Facts and Figures. I add up my income by month and transfer it to the back, so it's all there. Literally would take me 2 minutes to calculate how much they paid me for the year and hand write a receipt for it.

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My income is on a spreadsheet totaled weekly and by family, also a YTD total.
Spreadsheet does the calculations automatically, no need to add anything manually.
It also makes a printout of income from each family's YTD, which I print after the last week of the year for the tax person. And it makes weekly parent receipts automatically. I just highlight the ones I want and press print.

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http://www.tomcopelandblog.com/2013/...-holidays.html

Try this site.

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Sorry, but you HAVE to claim money given as a gift or bonus as income. Therefore it IS taxable.

I think DaycareDiva means that DCM added her (DCMs) bonuses into what she paid out to DaycareDiva and tried to claim the amount as part of her deductions/expenses.

At least that's how I read it.

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So the $1000 I give my kids each year for Christmas they have to pay tax on that ?

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Your kids are not a business.

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Why do you have them sign off?

My first year and only family, I sent an email with a pdf statement after last payment cleared. I also gave my DCF weekly receipts, I only did a statement to include my EIN.

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I don't think that is correct. It is actually the person giving the gift who has to pay gift taxes.
I've had to look up limits and tax laws on this when my uncle gifted me $10,000.

Here's one article that explains it a bit:
http://www.nydailynews.com/new-york/...icle-1.1237806

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So that they agree to the amount of $$ they paid. Just so that they can't come back later and say "hey, I paid $12,000 but only said I paid $10,000".

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Tom says that any $$ recieved by a daycare provider by a family is considered taxable income. I trust Tom.

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Huge difference between an individual receiving a gift of money and a small business receiving a gift of money.

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i have had a family try to claim what they paid another provider under my ein . I like to have a signature saying we both agree on the amount now .

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Yes, exactly. I know it must be claimed, but my accountant at the time said it all must be claimed separately. Eg. W-10 to my daughter.

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I think things like w2s have to be issued by Jan 31st, so that's when I issue my statements. And that's what I tell them if they request it sooner.

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To make sure they are claiming the right amount. For example a family that is part time and started toward the end of the year and only paid let's say $800 in daycare tries to claim $3000 in taxes. This may end up in both of you being audited since it looks like you didn't claim enough.

Also if they were at another daycare part of the year and try to claim their entire daycare expense for the year under your tax number, you may end up with an audit because again it looks like you didn't claim enough when in fact they never paid you that amount.

I have never filed daycare expenses for my own kids. But I'm pretty sure that regardless of how much they spent they can only claim $3000 total. Is this correct?

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ugh....so the parent that was demanding end of the year statement from me gets an attitude.

I told her well I can't get it to you now, I will have them out at the end of the month as stated. She said well I have your EIN from last year I will figure it out myself. I said fine.

So I don't trust this DCM much at all. What will happen if she does claim way more than she paid me?

We get an audit and I show the money I have collected from her? I have been through a personal audit before but never with my own business.

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I add up my yearly totals at the end of December and give it to the parents the first part of January. I total up each month as I go, so it doesn't take me long to add up the year end total for the kids in my care. I have several p/t families and the most I usually have enrolled at one time is 10 kids.

Usually I get at least 2 parents needing me to print up another receipt, because come tax time they can't find it, but it's not a big deal!

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Do you have to figure it from the first of the year or do you have a running total monthly?

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As long as you keep proper records you have nothing to worry about.

She bears the burden of proof if she tries to claim more than she actually paid.

Once you do get the yearly totals figured out, have her sign and date a copy. If it's different than what she already claimed, she'll be the one that will need to amend her taxes and/or prove to the IRS that she paid that amount.

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Here I go being a Debbie Downer

If you are worried she may give an inaccurate YTD total, maybe you should try and get that to her sooner if possible.
I only say this because I've been audited with my business twice, thanks to my louse of an ex husband, (but that's a story for another day), and it was time consuming, more so than it would've been to get the YTD totals to a client.
My accountant tells me that I must claim any gift in the form of money given to me from a client because that makes it part of the business and taxable.
In all honesty.....would Uncle Sam ever NOT try to have his hand out for some of that money too?

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This is exactly what I do

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Question. I don't understand why some of you won't give the year totals to parents until you are done with your taxes or until Feb, march or whenever.
If you record the payments throughout the year, is it really hard to spend 5 min the first week of January to copy it over into another paper for the parents?
Am I missing something?
I'm not trying to be rude, just trying to understand.

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How do you treat a gift from a parent?

If a parent gives you a gift of cash or a cash equivalent (gift card), you must report this as income. If a parent gives you a non-cash gift (book, scarf, flowers, etc.) from a parent this would be considered a gift and is not reportable as income.

How do you treat gifts you give daycare families/children:

IRS rules say that you can deduct gifts as a business expense up to $25 per person per year. This means that if you give $25 worth of gifts (birthday cards, Christmas presents, Mother's Day gifts, etc.) to a child's mother and another $25 to the child's father you can deduct the full $50. If you give gifts worth $15 to the mother and $45 to the father, you can deduct $40 ($15 plus $25).

The same $25 per person limit applies to gifts you give to the children in your care. However, the IRS Child Care Audit Guide says, "[IRS] Examiners should not confuse expenses related to activities done with the children with gifts."

Let's say you give a toy as a Christmas present to a child. If the toy is wrapped and the child takes it home to open it, then it's a "gift" subject to the $25 limit. Likewise, if you bought clothing for a child or gave a gift card to the child it would also be considered a “gift.”

However, if the child opens the present at your home and plays with the toy with the other children, then this could be said to be an activity expense not subject to the $25 limit. This would be true even if the child later took the toy home and did not return with it.

Donations:

You cannot claim a personal charitable contribution on any of the gifts you give to the families in your care. This is because families are not a charitable organization. Examples of non-profit charitable organizations are churches, Salvation Army, Goodwill, colleges, etc. You can claim a charitable contribution to such organizations on your IRS personal itemized tax form Schedule A. Gifts to charities cannot be deducted as business expenses





I hope this helps clear up some of the confusion.

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I have 14 families. Payments TO me are all recorded in one receipt book.

I do use MMK but don't always record payments in a timely manner and sometimes just wait until my accountant totals everything up so that I can match totals and cross check accuracy.

So 5 mins to totally something up for 14 families is over an hour of my time that I don't always have available at the moment when a family requests their info.

I also don't like to be micromanaged so I give info when I am done according to MY time line NOT according to the parents'

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That's how I read it at first also, but then thought, "That's just too bizarre, no way." The only other idea was that they were bonuses for her as a daycare provider. That idea actually made sense.

It is amazing the crazy out there!

Kelly

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ok idk why it didnt occur to me that record things differently
I have one form for each family. I record each payment when i get it so i literally just have to total up one column to have the family's total for the year.
I get it now.
I have never had a parent ask for the paper but I myself, like to be on top of things so I give it to them the first week of January.

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If you put that info on a spreadsheet instead of on paper, you could have it total automatically. And be ready for printing out. No end of year work whatsoever.

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MMK does it too but you still have to enter the info.

That's where MY lack of preparedness comes from.

MMK works MUCH better than any spread sheet as it totals it too...but you have to enter it.

I prioritize my day and spend most of it with the kids and not entering numbers/amounts so that is always left til last and once I am done working for the day, it's not a priority then either so I get it done when I HAVE to do it.

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I guess it must be how people are doing their record keeping. I use a book called Forms Facts and Figure and each month I take my monthly info and transfer it to the back of the book. This includes everything, income, expenses, food program. At any point during the year, I can tell you what every number is. It's a great and simple book if any of you have used it. There's a spot in the back to log what each parent has paid you per month, so to figure something like this would literally take 2 minutes.

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I have my own program on a spreadsheet. Takes less time to enter than to write it down.
No time for doing totals at all, that is automatic. It totals however I want it. By deposit, by week, by family, by year, or whatever. Prints personalized receipts. Prints tax info.
I spend my time with my kids too

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Is this an actual program or did you create something in excel

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Makes sense. I have a binder with the families payment records in it. I pull the binder out on Fridays and when a parent hands me a check, I record it real quick so that I don't forget.

It's always interesting to see how people do things differently. One thing that is easy for one person is a nucense for another.

I prefer paper because we have one laptop and idk if dh will be using it or not. I also don't have to worry about charging it.

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Tech high school kid made it in excel. One for income. Separate one for expenses.
I record two things: 1. Date. 2. Amount. The program does the rest.
It's really quite basic. The income program totals both across and down.
Across gives a weekly total. Down gives a family total. The total at the bottom and the total to the right are the current YTD totals.
The basic formula for totaling each family is this: =SUM(C3:C56)
That gives a total of numbers entered in all cells in column C, from row 3 to row 56. (53 weeks, for the rare year that has 53 paydays.) Just input the column letter and row number that you assign to each family.
Then for the weekly total, the example would be: =SUM(C3:P3)
That gives a total of numbers entered in all cells in row 3, from column C to column P.

I've added to the program as I've played with it and figured out parts of Excel. For example, sometimes I receive two payments from one family in one week, so I made a section that totals two payments and then enters it to the proper weekly and family cells.
But the most basic function is what is above, and it's really simple if you want to try it.


The expense spreadsheet is even more simple in its basic form. Simply total down, so:
=SUM(C5:C105) for each of your categories.
To make a "print list" for your taxes, go off to the right side past your category columns and make a section that says: =C107 which simply takes whatever number is in cell C107 and places it in the print list. Do this for each category, and you have a list to print for your tax prep.
I have made mine more useful by having tabs for: Time Space Items, Business Only Items, Personal Items, Taxes & Insurance, etc. This allows me to track all of my budget, both personal and business. But again, the most basic form (described above) does the most useful part.

If I can do it you can do it. I am not a computer whiz. Just a daycare provider.

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Um, yeah.... that read like secret code to me.

I didn't understand any of that...

I still add using a Playskool calculator that has sound effects. I think my son got it for Christmas in 1994.

Seriously though I don't really think it takes that much time to give a parent the year end total but like I said, I have to actually enter the info and regardless of how easy it is to do it, I just don't always do it and once you forget once or twice, it becomes pretty easy to "just figure it out tomorrow".

In other words, I am a procrastinator in certain areas and haven't yet figured out how not to be.

fwiw~I wasn't implying that you didn't spend time with your dcks....I meant I would rather play.......because I am a procrastinator in certain areas and haven't yet figured out how not to be.

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Another reason I LOVE e-pay through Minute Menu! I don't have to enter ANYTHING!!

I too am a giant procrastinator at things like this and will wait until the last minute of the last day if I could.

But now using epay and MM...Invoices are sent automatically. Parents pay and the payment is recorded automatically. Then I just print their W-10, which I just realized MM fills in for me too! All I do is print!

MM also lets me print out an itemized statement showing the date and amount of each payment.

Parents can also print their own receipts at anytime.

My work in this area is very minimal.

This is the first full year I've used epay and I wish I did it sooner! Last year was part epay part cash or check (before I started using epay) so it was more complicated.

The $1 fee is the best money I've spent on daycare so far!

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Thanks! I understand it but would have to mess around in excel to make sure im doing it right.

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You could set up a few columns and rows and the formulas and then test it by putting in simple numbers like 100, 200, 300, 400, 500 to represent the payments by each family. Then check the totals to be sure you set it up right. It would be clear which one wasn't done right, by what the total is. Hope that makes sense.

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I have mine done this way in excel for my expenses. I don't enter them in mmk because it takes too long. Plus I don't need it broken down by individual section like mmk either

Gosh my phone keeps changing all my words. Lol I hope this makes sense.

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I use a spread sheet too. Very easy to print out the end of the year receipt. Mine are even itemized so they see the date, check number and amount paid for each month (I am paid monthly). With a yearly total at the bottom.

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There is something in the Tax section and Tom's articles about how we don't actually HAVE to provide any info to parents unless they hand us a certain tax form to fill out AND even that is just with our EIN number, you do not HAVE to give them an amount on there.

BUT of course to make sure they report the correct amount it is recommended to give them something. I give out a statement of all their payments for the year (an excel spreadsheet I made years ago that I update every few weeks all year long) and have them sign and return one copy to me. I follow the deadline for w2's which is actually February 2nd this year (its usually around 1/31 but this year that is a Sat so its the Monday). If I can get it to them earlier I will but I don't feel like I have to.

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Same here (minus the procrastinator part )

I don't even do invoices anymore. I set everyone up for autopay, do the initial login before the parent signs on, and let it keep all the records (no $1 fee if they don't pay online and the program still does all the work).

When they don't approve the online payment (or ever even log in the first time) it will simply roll over to "unpaid invoices" for me to fill in cash payments. Easy peasy and all invoice numbers stay in order.

Now, if a client pays some online and some in cash (which almost all end up doing sometimes) they will have two W-10's for me to print, sign in blue ink and give them. Still simple enough...

I also like to give them the "total hours in care" printout when I give them their year end total. It stops the whole "daycare is so expensive" conversation right in it's tracks. Game. Set. Match.

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I LOVE that everything is automatic! I don't do anything except check to be sure the payments are made. Only one of my parents did not select auto pay, so it's easier for parents too bc the payment is made automatically. The other parent still pays online but does it manually each week.

I love the idea of the total hours in care...I should print that too

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It is on "reports" under the "attendance tab" "per child" (part of the time/space calculation).

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you are my twin!!!

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