Daycare.com Forum
Daycare and Taxes>2012 or 2013
Blackcat31 12:52 PM 01-18-2013
Tom,
I receive payments from MN state for a child care family.
I provided services in Dec 2012.
The state paid me for these services on January 3, 2013.
I recorded this amount in MMK accordingly.
I received my 1099 from MN state and the total amount paid was different from my records. I went over my records several times trying to figure out where the difference was. I found it and see that it was the amount they paid me on January 3, 2013.
According to them, the billing says payment was "prepared" on December 31, 2012 and ISSUED on January 3, 2013.
I am confused as to how I should handle this.
According to my records now that I entered into MMK, that income was received in 2013 and will be accounted for in that year when I do my taxes but according to the 1099 I received from the state, that income will be accounted for in 2012.
How do I handle this so that my account of what was paid and the state's account of what was paid to me match?
I receive payments from MN state for a child care family.
I provided services in Dec 2012.
The state paid me for these services on January 3, 2013.
I recorded this amount in MMK accordingly.
I received my 1099 from MN state and the total amount paid was different from my records. I went over my records several times trying to figure out where the difference was. I found it and see that it was the amount they paid me on January 3, 2013.
According to them, the billing says payment was "prepared" on December 31, 2012 and ISSUED on January 3, 2013.
I am confused as to how I should handle this.
According to my records now that I entered into MMK, that income was received in 2013 and will be accounted for in that year when I do my taxes but according to the 1099 I received from the state, that income will be accounted for in 2012.
How do I handle this so that my account of what was paid and the state's account of what was paid to me match?
TomCopeland 03:07 PM 01-18-2013
Isn't record keeping fun!
Technically, the state issued their check in 2012 and so it shows up on their 1099, but you didn't get it until 2013 which shouldn't be reported by you as income until 2013.
The same thing can happen with Food Program checks.
Since the state issued a Form 1099, this will be reported to the IRS. I would recommend showing this income in 2013, not 2012. When you lump together your parent fees and state payments onto Schedule C, it's not clear that you didn't report all your 1099 income as income in 2012. If you got audited (highly unlikely, and certainly not for this), you can show your records and you will not be required to pay taxes on the money in 2012.
Join me for a webinar “2012 Tax Changes: How to Avoid Mistakes on Your Tax Return” Tuesday, February 12th at 8:30-10:00pm Eastern Time. The cost is $25 (100% tax deductible!). To register: http://events.r20.constantcontact.co...&llr=yatrx4cab
Technically, the state issued their check in 2012 and so it shows up on their 1099, but you didn't get it until 2013 which shouldn't be reported by you as income until 2013.
The same thing can happen with Food Program checks.
Since the state issued a Form 1099, this will be reported to the IRS. I would recommend showing this income in 2013, not 2012. When you lump together your parent fees and state payments onto Schedule C, it's not clear that you didn't report all your 1099 income as income in 2012. If you got audited (highly unlikely, and certainly not for this), you can show your records and you will not be required to pay taxes on the money in 2012.
Join me for a webinar “2012 Tax Changes: How to Avoid Mistakes on Your Tax Return” Tuesday, February 12th at 8:30-10:00pm Eastern Time. The cost is $25 (100% tax deductible!). To register: http://events.r20.constantcontact.co...&llr=yatrx4cab
Blackcat31 07:44 AM 01-19-2013
Thank you for your help!
Yes, record keeping is tough when this kind of thing happens...
Yes, record keeping is tough when this kind of thing happens...