What to Give to Parents: Social Security Number or EIN?

6a0133f3fc5805970b0147e14e5d9f970b-320wiFamily child care providers should not give parents their Social Security number.

Parents want this number so they can claim the federal child care tax credit. They can use either your Social Security number or a business identification number.

The reason child care providers don’t want to pass out their Social Security number is because of the growing problem of identity theft. Giving out your Social Security number to different families year after year increases the chances that it will fall into the wrong hands.

Instead, get an Employer Identification Number (EIN) from the IRS and give this out to the parents of the children in your program. If you are hiring employees you must get an EIN.

You can get your EIN at www.irs.gov. It will take you less than fifteen minutes to fill out the online screens after which you will instantly receive your number. Only one question may be confusing to answer: “Why is the Sole Proprietor requesting an EIN?” Unless you are hiring employees, answer “Started a New Business” even if you have been in business for years.

There is no fee to get your EIN. If you already have an EIN from a previous business you can use the same number as a child care provider.

If you prefer, you can call the IRS at 800-829-4933 and get your EIN on the phone after answering a few questions.

In a previous blog post I discussed giving parents an end-of-year receipt using Form W-10.

If you have further questions contact me at tomcopeland@live.com.

Tom Copeland – www.tomcopelandblog.com

Image credit: calameo.com

6a0133f3fc5805970b01bb08151dd5970d-320wiFor more information, see my book Family Child Care Record Keeping Guide.

 

 

 

Copyright 2011, Tom Copeland, www.tomcopelandblog.com



Categories: Parents & Taxes, Record Keeping & Taxes

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9 replies

  1. I can attest to how simple it is to get an EIN. I got my a few years ago when the IRS simplified the process. It really did just take a few minutes, and I was using my number! An added bonus, along with the security aspects, is that it gives the provider a much more professional and businesslike appearance using an EIN rather than just their social security number.

  2. Savvy post . I Appreciate the analysis – Does someone know where my business might be able to get access to a template a form document to use ?

  3. Will I still be able to file taxes with my husband if I have an EIN number?

    • Yes! Having an Employer Identification Number (EIN) has nothing to do with how you file your taxes with your husband. The EIN is used with parents, so you don’t have to reveal your Social Security number.

  4. I registered my home program as an LLC in Ohio (No employees) at the beginning of this year and obtained an EIN at that time. Im receiving conflicting information from licensing and they’re saying i have to use my social security number instead of my company’s EIN because all of my business income will be on my personal tax return. Should i obtain another EIN as a sole proprietor to alleviate having to use my social security number at the end of the year? Or can i continue using my LLC EIN?

  5. From a tax point of view, you will use your EIN, not your Social Security number, on your business tax forms. You will put your Social Security number on your personal tax forms (Form 1040). So you don’t need to set up a sole proprietor. I’m not sure if you are saying that licensing requires you to give them your Social Security number instead of your EIN. That’s a separate issue. But, from a tax point of view, you don’t need to do anything differently. Tom

    • Thank you for your response. Due to being a single member LLC in Ohio, I was informed that all of my business income, in addition to what I withdraw for myself, will need to be reported on my personal tax forms. Business tax forms wont need to be filed because as a SMLLC, I’m considered a disregarded entity in my state. With all that being said, would parents need my social security number for the end of the year (since the income has to be reported on my personal taxes)?

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