The Truth About End-of-the-Year Parent Receipts

6a0133f3fc5805970b01b8d0bb2c54970c-320wiEvery January I get many questions from family child care providers on the same topic:

“Do I have to give the parents in my program an end-of-year receipt?”

“I’m I responsible for giving parents my Social Security number, even if they left owing me money?

“Do I have to complete IRS Form W-10 and give one to each parent in my program?”

The answer to all of these questions is “no.”

There seems to be a lot of confusion around this issue, so let’s clear things up.

Most parents who pay a child care provider are entitled to claim a federal child care tax credit using IRS Form 2441 Child and Dependent Care Expesnes. This form requires the parent to list the name, address, identification number of the child care provider, and the amount paid to the provider.

The Instructions to Form 2441 tell parents they can use IRS Form W-10 Dependent Care Provider’s Identification and Certification to collect the identification number of the caregiver. It’s the parent’s responsibility to give this form to the child care provider. It’s not your responsibility to give this form to the parent.

Few, if any parents are giving their family child care provider Form W-10!

According to the law, family child care providers are not required to give parents their identification number and are not required to give parents an end-of-year receipt. If the parent left your program in 2014 you are not required to track them down to give them this information.

If you are on good terms with the parents in your program I do recommend that you give parents an end-of-year receipt, along with your identification number.

Ask the parent to sign one copy and keep it in your records. This can help protect you if you are audited and are asked to provide evidence of what the parent paid you for the year. Many providers give receipts to parents this time of year, but most don’t keep a copy signed by the parent.

You can use the Form W-10 as your end-of-year receipt. Although the form doesn’t provide a space indicating how much the parent paid, you can write the amount across the top of the form and have the parent sign a copy of the form that you keep in your records.

Form W-10 is included in the Minute Menu Kids Pro software program as well as in my 2014 Family Child Care Tax Workbook and Organizer. Redleaf Press also publishes a family child care receipt book.

You can also create your own receipt: “Received by ______________________(your name) for child care services for the care of ________ (name of child) for 2014. Provider identification number __________ Signed  _________ (parent) _____________ (your name) Dated: __________”

If a parent left owing you money I would recommend telling the parent that you will only give them your identification number once they have paid you in full. The only time you face a consequence is if the parent gives you a copy of Form W-10 and you fail to fill it out. If this happens you face a $50 penalty. But since 99% of parents don’t know they are supposed to do this, I wouldn’t worry about it.

Don’t give parents your Social Security number. Instead, get an identification number (EIN) and use it instead of your Social Security number with parents. See my article about this.

How do you handled end-of-year receipts?

Note: This is a revised version of an article I posted four years ago on my blog.

Image credit: redleafpress.org

2014 TW smallFor further information, see my 2014 Family Child Care Tax Workbook and Organizer.



Categories: Parents & Taxes, Record Keeping & Taxes

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4 replies

  1. If I had parents not in good standing I might rethink it, but right now I just print everyone a W10 from Minute Menu and hand it out. I actually printed them today. I had two parents leave this last year on very good terms (full notice, full fees paid…one for grandparent to watch child and the other for child to start school) and I’m mailing their forms to them.
    To me this seems like a professional business thing to do, even if it’s more than the law requires.

  2. I completely agree Jen. It is the professional thing to do.

  3. What should I do for parents who have left in band standing? I was hired by them as a nanny and they refused to issue a W2 or any tax forms to me. I filed an SS8 form because I ended up having to pay all taxes and they’re trying to file me as a private contractor which I am not. I have known these people for less than 6 months and I do not feel comfortable giving them my ssn. They have sent me texts and letters threatening prosecution by the IRS for not returning the W10. I have never experienced anything like this.

    • The worse thing that can happen is that they file their child care tax credit form and attach a note to it saying that you refused to return the W-10. Then, it’s possible the IRS would audit you and fine you $50 for not returning the form. The chances that the IRS will audit you are extremely small. It’s good that you file the SS8 form because that will get the parent in trouble and likely result in you getting a refund for the taxes you paid. Call me at 651-280-5991 if you need more help.

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