Daycare.com Forum
Daycare and Taxes>Split up Parents issue, Paying Childcare and claiming
daycare 11:12 PM 12-09-2013
Hi Tom,
I have a dcf that is Split up, never married. The parents reside in different states and both are fighting over who will get to claim DC expenses for their child on the upcoming taxes. The child lives with the mother 99.9 % of the time.
Right now only the DCM pays me. The father sends her money, not court ordered. She then pays me.
The father was told that the only way he can claim any of the daycare expenses on his taxes is if he pays me directly. The parents want to split the cost of daycare and both be able to claim 50-50% on their taxes. I am not crazy about the idea of having to create two separate accounts and billing two different people for one child and trying to track all of that, but will have to if they are allowed to do it this way to support their claims.
Is this even possible?
Will I have to accept payments from both Parents in order to give credit where due?
How should I handle this. Thanks so much
I have a dcf that is Split up, never married. The parents reside in different states and both are fighting over who will get to claim DC expenses for their child on the upcoming taxes. The child lives with the mother 99.9 % of the time.
Right now only the DCM pays me. The father sends her money, not court ordered. She then pays me.
The father was told that the only way he can claim any of the daycare expenses on his taxes is if he pays me directly. The parents want to split the cost of daycare and both be able to claim 50-50% on their taxes. I am not crazy about the idea of having to create two separate accounts and billing two different people for one child and trying to track all of that, but will have to if they are allowed to do it this way to support their claims.
Is this even possible?
Will I have to accept payments from both Parents in order to give credit where due?
How should I handle this. Thanks so much
Great Beginnings 06:13 AM 12-10-2013
Speaking from experience don't allow them to pay separate. Too many issues arise and then you end up without getting paid, wanting to term and mom arguing you can't term and it's not her fault dad didn't pay and she's paid all along etc.... Their breakup should not equal your problem.
TheGoodLife 07:25 AM 12-10-2013
I would tell them I only do 1 receipt per family, and if they needed 2 they would have to pay $20 more a month for the extra administrative time it took (or whatever amount you thought would make it worth your time- $20/week if you really didn't want to 
)
)
Blackcat31 07:37 AM 12-10-2013
I am sure Tom will have the right answer but I currently have 2 DCF's that split the deduction for child care expenses on their taxes but I receive payment from only one parent in each situation.
I write out one receipt to the person paying me and include on the memo line that it is payment for Billy Black for care on XX days.
The parents figure out between them how much they are each going to claim.
Why can't DCM give DCD a receipt for the money that DCD gives to her? They can figure out how much each is going to claim and I would think all the dad would need to have for proof of payment is receipts for what he paid mom.
I would not allow myself to be put in the middle of any of this. I give receipts to who paid and that is it. What each family chooses to claim as a deduction and how is on them. I play NO role in that.
I write out one receipt to the person paying me and include on the memo line that it is payment for Billy Black for care on XX days.
The parents figure out between them how much they are each going to claim.
Why can't DCM give DCD a receipt for the money that DCD gives to her? They can figure out how much each is going to claim and I would think all the dad would need to have for proof of payment is receipts for what he paid mom.
I would not allow myself to be put in the middle of any of this. I give receipts to who paid and that is it. What each family chooses to claim as a deduction and how is on them. I play NO role in that.
daycare 08:05 AM 12-10-2013
I understand what you are saying, but the father believes that he will not get credit for the childcare if he does not pay me directly.
He is saying that he was told this by his cpa and that he needs to make his 50% of the payments to me in order to be able to take the claim.
I have never been in this situation, so I don't really know how to handle it.
He is saying that he was told this by his cpa and that he needs to make his 50% of the payments to me in order to be able to take the claim.
I have never been in this situation, so I don't really know how to handle it.
Blackcat31 08:29 AM 12-10-2013
Originally Posted by daycare:
I understand what you are saying, but the father believes that he will not get credit for the childcare if he does not pay me directly.
He is saying that he was told this by his cpa and that he needs to make his 50% of the payments to me in order to be able to take the claim.
I have never been in this situation, so I don't really know how to handle it.
Tell him to call the IRS. Have him send you the link as to what he found out.I understand what you are saying, but the father believes that he will not get credit for the childcare if he does not pay me directly.
He is saying that he was told this by his cpa and that he needs to make his 50% of the payments to me in order to be able to take the claim.
I have never been in this situation, so I don't really know how to handle it.
Blackcat31 08:32 AM 12-10-2013
Plus if your policies state you give one receipt to the parent paying you, why are you even entertaining dad's issues?
This is between DCM and DCD and really has nothing to do with you unless you plan on accommodating dad.
This is between DCM and DCD and really has nothing to do with you unless you plan on accommodating dad.
TwinKristi 09:08 AM 12-10-2013
But only one person can claim the child (and from what you're saying it sounds like mom legally is entitled to claim her) so what good would it do to even accept his payments and give them each receipts?
Total rant here but I find it humorous how some men think they should be able to write off any expense towards their child who they don't even live with. Most NC fathers are responsible for providing health insurance, half of OOP medical expenses, half of childcare and child support even if they can't claim the child on their taxes. If the parents make the arrangement to alternate claiming the child (which I find ridiculous if the parent doesn't even have physical visitation or custody of the child) then the mom may lose the ability to claim head of household. There is way to do "status" claiming for cases like this but it's not something easy to do. I've done taxes seasonally for several years on the side and its always stumped me and also raises the audit risk.
Total rant here but I find it humorous how some men think they should be able to write off any expense towards their child who they don't even live with. Most NC fathers are responsible for providing health insurance, half of OOP medical expenses, half of childcare and child support even if they can't claim the child on their taxes. If the parents make the arrangement to alternate claiming the child (which I find ridiculous if the parent doesn't even have physical visitation or custody of the child) then the mom may lose the ability to claim head of household. There is way to do "status" claiming for cases like this but it's not something easy to do. I've done taxes seasonally for several years on the side and its always stumped me and also raises the audit risk.
Blackcat31 09:14 AM 12-10-2013
Originally Posted by TwinKristi:
But only one person can claim the child (and from what you're saying it sounds like mom legally is entitled to claim her) so what good would it do to even accept his payments and give them each receipts?
Total rant here but I find it humorous how some men think they should be able to write off any expense towards their child who they don't even live with. Most NC fathers are responsible for providing health insurance, half of OOP medical expenses, half of childcare and child support even if they can't claim the child on their taxes. If the parents make the arrangement to alternate claiming the child (which I find ridiculous if the parent doesn't even have physical visitation or custody of the child) then the mom may lose the ability to claim head of household. There is way to do "status" claiming for cases like this but it's not something easy to do. I've done taxes seasonally for several years on the side and its always stumped me and also raises the audit risk.
They aren't arguing over who claims the child as a deduction, they are trying to split the deductions for child care costs.But only one person can claim the child (and from what you're saying it sounds like mom legally is entitled to claim her) so what good would it do to even accept his payments and give them each receipts?
Total rant here but I find it humorous how some men think they should be able to write off any expense towards their child who they don't even live with. Most NC fathers are responsible for providing health insurance, half of OOP medical expenses, half of childcare and child support even if they can't claim the child on their taxes. If the parents make the arrangement to alternate claiming the child (which I find ridiculous if the parent doesn't even have physical visitation or custody of the child) then the mom may lose the ability to claim head of household. There is way to do "status" claiming for cases like this but it's not something easy to do. I've done taxes seasonally for several years on the side and its always stumped me and also raises the audit risk.
TwinKristi 09:31 AM 12-10-2013
Originally Posted by Blackcat31:
They aren't arguing over who claims the child as a deduction, they are trying to split the deductions for child care costs.
That's my point... he can't claim ANY of the child's expenses if he doesn't claim the child. So why even entertain the idea?They aren't arguing over who claims the child as a deduction, they are trying to split the deductions for child care costs.
Lorri 09:53 AM 12-10-2013
It seems to me even if he doesn't pay you he gets to write of what he pays the mom even if she pays the daycare. I only deal with who I contract with. If they are not together and the mom signs the contract then she is the responsible for following all the rules not him. If he doesn't pay a week who would you have to go after the mother or the father? I would say he could say he never signed a contract.
TwinKristi 10:24 AM 12-10-2013
Originally Posted by Lorri:
It seems to me even if he doesn't pay you he gets to write of what he pays the mom even if she pays the daycare. I only deal with who I contract with. If they are not together and the mom signs the contract then she is the responsible for following all the rules not him. If he doesn't pay a week who would you have to go after the mother or the father? I would say he could say he never signed a contract.
He wouldn't be able to write off anything which is why he wants to pay directly, but even then he can't claim it. Who knows what the payments is for exactly when he pays mom. Food, had, rent, clothing... It's like saying you can write off child support.It seems to me even if he doesn't pay you he gets to write of what he pays the mom even if she pays the daycare. I only deal with who I contract with. If they are not together and the mom signs the contract then she is the responsible for following all the rules not him. If he doesn't pay a week who would you have to go after the mother or the father? I would say he could say he never signed a contract.
MarinaVanessa 10:53 AM 12-10-2013
Originally Posted by TwinKristi:
That's my point... he can't claim ANY of the child's expenses if he doesn't claim the child. So why even entertain the idea?
I have DCKs where the mom has custody but dad has them a few days out of the week and uses me when his GF can't watch them and he still claims what he spends on DC on his taxes even though he doesn't have custody. DCM has used me before for drop in and paid me directly ... I use minute menu so its easy for me to invoice one parent or the other and each can claim what they each pay. That's my point... he can't claim ANY of the child's expenses if he doesn't claim the child. So why even entertain the idea?
Maybe Tom can clarify but the chil tax credit and the child care tax credit are two separate things and as far as I know the child tax credit is the only one that only the custodial parent can claim.
OP can you just have the parents alternate payments week to week? Have one parent pay one week and the other the next etc. Then you only have to give them each their own receipt
TomCopeland 10:56 AM 12-10-2013
Originally Posted by daycare:
Hi Tom,
I have a dcf that is Split up, never married. The parents reside in different states and both are fighting over who will get to claim DC expenses for their child on the upcoming taxes. The child lives with the mother 99.9 % of the time.
Right now only the DCM pays me. The father sends her money, not court ordered. She then pays me.
The father was told that the only way he can claim any of the daycare expenses on his taxes is if he pays me directly. The parents want to split the cost of daycare and both be able to claim 50-50% on their taxes. I am not crazy about the idea of having to create two separate accounts and billing two different people for one child and trying to track all of that, but will have to if they are allowed to do it this way to support their claims.
Is this even possible?
Will I have to accept payments from both Parents in order to give credit where due?
How should I handle this. Thanks so much
You are not required to agree to the parent's request. You can accept separate payments or not. In the end, it's not your business as to which parent is entitled to claim the child care tax credit. The IRS law says that only one parent can claim the credit. That parent must be able to claim the child as a dependent. The child can only be a dependent if she lives with the parent for more than half the year and the parent provides more than half of her living expenses. So, even if you agree with the father, it won't help him. I don't think it's worth trying to argue with him about this. You should decide whether you want to do what they request.Hi Tom,
I have a dcf that is Split up, never married. The parents reside in different states and both are fighting over who will get to claim DC expenses for their child on the upcoming taxes. The child lives with the mother 99.9 % of the time.
Right now only the DCM pays me. The father sends her money, not court ordered. She then pays me.
The father was told that the only way he can claim any of the daycare expenses on his taxes is if he pays me directly. The parents want to split the cost of daycare and both be able to claim 50-50% on their taxes. I am not crazy about the idea of having to create two separate accounts and billing two different people for one child and trying to track all of that, but will have to if they are allowed to do it this way to support their claims.
Is this even possible?
Will I have to accept payments from both Parents in order to give credit where due?
How should I handle this. Thanks so much
MarinaVanessa 11:01 AM 12-10-2013
Originally Posted by TomCopeland:
You are not required to agree to the parent's request. You can accept separate payments or not. In the end, it's not your business as to which parent is entitled to claim the child care tax credit. The IRS law says that only one parent can claim the credit. That parent must be able to claim the child as a dependent. The child can only be a dependent if she lives with the parent for more than half the year and the parent provides more than half of her living expenses. So, even if you agree with the father, it won't help him. I don't think it's worth trying to argue with him about this. You should decide whether you want to do what they request.
This is great Tom. Thanks for the info. Now what about when parents have their children 50/5? Do neither claim the child and the child care tax credits in that situation since they both have the child 50% of the time and not more?You are not required to agree to the parent's request. You can accept separate payments or not. In the end, it's not your business as to which parent is entitled to claim the child care tax credit. The IRS law says that only one parent can claim the credit. That parent must be able to claim the child as a dependent. The child can only be a dependent if she lives with the parent for more than half the year and the parent provides more than half of her living expenses. So, even if you agree with the father, it won't help him. I don't think it's worth trying to argue with him about this. You should decide whether you want to do what they request.
TwinKristi 11:03 AM 12-10-2013
Originally Posted by TomCopeland:
You are not required to agree to the parent's request. You can accept separate payments or not. In the end, it's not your business as to which parent is entitled to claim the child care tax credit. The IRS law says that only one parent can claim the credit. That parent must be able to claim the child as a dependent. The child can only be a dependent if she lives with the parent for more than half the year and the parent provides more than half of her living expenses. So, even if you agree with the father, it won't help him. I don't think it's worth trying to argue with him about this. You should decide whether you want to do what they request.
You are not required to agree to the parent's request. You can accept separate payments or not. In the end, it's not your business as to which parent is entitled to claim the child care tax credit. The IRS law says that only one parent can claim the credit. That parent must be able to claim the child as a dependent. The child can only be a dependent if she lives with the parent for more than half the year and the parent provides more than half of her living expenses. So, even if you agree with the father, it won't help him. I don't think it's worth trying to argue with him about this. You should decide whether you want to do what they request.
I think you just posted about this a few weeks ago too and I changed a policy over it actually! I had a mom and Nana both paying me for different days but only mom can claim it and she's who I contracted with so she gets all the receipts for care, not some to mom and some to Nana.
TwinKristi 11:05 AM 12-10-2013
Originally Posted by MarinaVanessa:
This is great Tom. Thanks for the info. Now what about when parents have their children 50/5? Do neither claim the child and the child care tax credits in that situation since they both have the child 50% of the time and not more?
I know you asked Tom but I believe this depends on the agreement made by the parents during their divorce or just what they mutually agreed on. They typically would alternate claiming the child and the expenses.This is great Tom. Thanks for the info. Now what about when parents have their children 50/5? Do neither claim the child and the child care tax credits in that situation since they both have the child 50% of the time and not more?
Eta- even if they put those expenses on their taxes it doesn't mean they're doing what they're supposed to be by law. I've heard of people using daycare expenses on one child for another child. If they're audited this would be discovered but if no audit, no one knows who the expenses are for.
Blackcat31 11:51 AM 12-10-2013
Originally Posted by MarinaVanessa:
This is great Tom. Thanks for the info. Now what about when parents have their children 50/5? Do neither claim the child and the child care tax credits in that situation since they both have the child 50% of the time and not more?
I found this on a tax site where someone asked the same question. The questions were being answered by a tax professional. Maybe this will help answer your question. This is great Tom. Thanks for the info. Now what about when parents have their children 50/5? Do neither claim the child and the child care tax credits in that situation since they both have the child 50% of the time and not more?
"When there is no signed document by the "custodial parent"---then the IRS recognizes the custodial parents claim to dependency. However, most parents state that they have "joint custody" or "50/50 custody". In reality, usually one parent has the child(ren) longer that the other, especially since each year has 365 days, (except for last year---366). The IRS recognizes overnights as a tool for counting time spent with each parent.
If there is a true situation that each parent had the child for exactly 183 days during the year, and the parents were separate for the entire year, then the child would not be considered a "qualifying child" of either parent, and could only be a qualified relative. In this case, whoever paid more than 50% of the child's support would be able to claim the child.
If the situation is that the parents were together for part of the year, and the child alternated between them for part of the year split up, and was with each parent exactly the same # XXXXX days, (For example 240 days with one parent, 240 days with the other parent---because of shared time for part of the year) then there is a tie-breaker situation and whoever had the highest adjusted gross income would be allowed to claim the child.
There is a very convoluted set of rules for this type of situation. You can read m ore about types of dependency, rules for children of divorced or separated parents, and tie-breaker situations in Publication 501, found at www.irs.gov. If you need additional clarification, please let me know."
TomCopeland 12:37 PM 12-10-2013
Originally Posted by MarinaVanessa:
This is great Tom. Thanks for the info. Now what about when parents have their children 50/5? Do neither claim the child and the child care tax credits in that situation since they both have the child 50% of the time and not more?
Since the parent claiming the child care credit has to have paid more than 50% of the support for the child and have the child live with them more than 50% of the year, neither parent could claim the credit if the child lived with each parent for half the year.This is great Tom. Thanks for the info. Now what about when parents have their children 50/5? Do neither claim the child and the child care tax credits in that situation since they both have the child 50% of the time and not more?
daycare 12:49 PM 12-10-2013
TOm thank you so much for clearing this up for me. I have copied what you wrote and will pass the information on to the father.
Now that I know I am not legally obligated to have to do this, I am going to tell them I will continue to do things the way they are now One parent only.
Now that I know I am not legally obligated to have to do this, I am going to tell them I will continue to do things the way they are now One parent only.
rebekki78 07:21 AM 01-16-2014
Originally Posted by Great Beginnings:
Speaking from experience don't allow them to pay separate. Too many issues arise and then you end up without getting paid, wanting to term and mom arguing you can't term and it's not her fault dad didn't pay and she's paid all along etc.... Their breakup should not equal your problem.
I agree, from experience. One parent pays. If they each pay half, one parent pays the other parent their half. Don't fight that battle, not worth it.Speaking from experience don't allow them to pay separate. Too many issues arise and then you end up without getting paid, wanting to term and mom arguing you can't term and it's not her fault dad didn't pay and she's paid all along etc.... Their breakup should not equal your problem.