Monthly Archives: March 2014

Your Special Rule for Children of Divorced or Separated Parents

Baby Only Facing RightHow should you handle parents who are divorced or separated when it comes to providing receipts?

As a good practice, we advocate our child care providers issue receipts whenever they are paid.  Do you have to do this?  No, it just makes your record keeping easier.

The question here is when you have a child in your care, whose parents are separated or divorced, which parent do you give the receipt to?  The short answer : you only give a receipt to the person who actually paid you. Make it one of your business rules, and let parents know (and include in your program materials).

But what do you do if you find yourself in a situation where one of the parents comes to you and says they have been paying the other parent for your child care services… and they need the receipt to declare it.  Advise the parent that they will have to speak to the other parent because you only issue receipts to someone who has directly paid you and they will have to speak to the other parent if they are planning to claim a child care tax credit.

What happens if both parents, separated or divorced, have paid you.  If you have kept a register of who paid when, then add it up and give each parent a receipt for the amount they paid.  If you didn’t keep it separate, then, according to Tom Copeland, “give each of them the same receipt and mark “Duplicate” on each receipt”.

For more information about on this read Child and Dependent Care Expenses,

Free Childcare Forms Promote Best Practices

Practicing good communications includes good forms!

During our last seminar series for the YMCA Childcare Resource Services, our attendees expressed an interest in best practices and tools.  We always reference Tom Copeland as an excellent source of information, and we are pleased to turn you on to another valuable site that has free forms that you can easily download and customize for your childcare business.

To begin, how would you rate your communication skills?  We know you have to be effective working and caring for children – but how about communicating with the parents?  Do you routinely sit and talk with the parents?  Do you have a printed handbook that discusses your business policies, rules, and other practices?

ccl-logoThe Child Care Lounge  has all the materials to help you assemble a professional handbook with the type of information exclusively for childcare providers.

First you will see Printable Contracts, and they include:

Then scroll down to the Printable Parent Letters and Forms.  There you will find, in PDF and word format:

And then on to Progress Reports, Employee Forms, Promotional Signs, etc.

Remember this – when you have a *handbook* you are communicating how you conduct and handle your business.  Your clients will value your professionalism and attention to detail.  You and your employees will benefit by establishing levels of expectation in performance and practices.  Think of it as a foundation.  Don’t forget to check out our Checklists, Mileage Logs and other forms .

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For more than 30 years R. Patrick Michael has been preparing tax returns for individuals, small businesses, cottage industries and in-home child care providers. Pat is a recognized child care provider tax expert, and has been providing educational seminars for child care providers in San Diego County for the YMCA Child Resource Services for more than 18 years.  Pat and his team have built a following that is comprised of long-term clients, new relationships and word-of-mouth referrals. Child Care Tax Specialists take care of their clients year-round with tax preparation, business entity creation and support, as well as tax planning for retirement, and estate planning.

NEED HELP?  CALL (619) 589-8680 TODAY!

 

 

 

Are You Depreciating Your Household Items Correctly?

Depreciating  household items can represent a significant tax savings!

Tax Refund Ahead SignWe always meet with our new child care provider clients to check their past deductions because many times they have not properly depreciated the day-to-day materials, furniture, and household items they use in the daily operation of their business.

We want to know about these items – even if they were purchased before the business was started. These can result in considerable tax savings for you.

It’s true!  You are entitled to claim depreciation on household items that you purchased BEFORE your business was even started.  In fact, you should depreciate all the items based on the lower end of the purchase price (your tax preparer will guide you) or the of the item(s) when they were first used in your business.

The list can include: beds, linens, towels, tables, chairs, desks, refrigerator, freezer, washer/dryer … are you getting the picture.  Any of the items that you are using in support of your child care business is a legitimate deduction.  This includes little stuff too, like pictures on the wall, garden hose, tools (for use outside).

The IRS Child Care Provider Audit Technique Guide states, “For many providers, when they start their business many items that were personal use only are used in the business.  They are entitled to depreciate the business use portion of those assets.”

 

For more than 30 years R. Patrick Michael has been preparing tax returns for individuals, small businesses, cottage industries and in-home child care providers. Pat is a recognized child care provider tax expert, and has been providing educational seminars for child care providers in San Diego County for the YMCA Child Resource Services for more than 18 years.  Pat and his team have built a following that is comprised of long-term clients, new relationships and word-of-mouth referrals. Child Care Tax Specialists take care of their clients year-round with tax preparation, business entity creation and support, as well as tax planning for retirement, and estate planning.

NEED HELP?  CALL (619) 589-8680 TODAY!