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

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Every 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 continues to be some 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 Expenses. 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 parent receipts. If the parent left your program in 2015 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.

If a parent has left your program earlier in 2015 you can mail them two copies of the receipt (with a stamped envelope) and ask them to sign one and return it to you.

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 2015 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 2015. 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 Employer Identification Number (EIN) and use it to reduce the chances of identity theft. See my article, “What to Give to Parents: Social Security Number or EIN?”

How do you handled end-of-year receipts?

Image credit: redleafpress.org

2015 Tax WorkbookFor further information, see my 2015 Family Child Care Tax Workbook and Organizer.



Categories: Parents & Taxes, Record Keeping & Taxes

12 replies

  1. I would love to win a tax keeping booklet. Have been to one of his simanars and found it very helpful.

  2. Good evening I had a parent request a letter indicating that I confirm that the child I provided services for lived with her for the whole year. For tax purposes I’m not sure if that is a question for me to confirm, please advise.
    Thank you

    • You shouldn’t sign such a letter because you don’t know where the child went at the end of the day and can’t be a witness to where the child lived during the year. The parent wants this information to support her claim that the child was her dependent, but you aren’t in a position to know.

      • I’m sorry for just seeing your reply I’m learning how to use this portal lol. But thank yoi for rhe advice I told her just

  3. My parent did not abide by her contract of giving two weeks notice. She signed the contract agreeing and acknowledging that if they leave an account unpaid, they do not receive their tax statement until they pay. I explained when they requested their tax statement on Jan 23. Never heard anything more until a knock on the door yesterday from the postal worker, requesting my signature for certified letter. The parent sent a W10 and I called IRS only to be told, unfortunately I have to complete or face a fine. My question is going forward, can I subtract the fees owed and do a tax statement reflecting that next year. What rights do Providers have in this situation. How do we know with a w10 parents are not claiming excessive amount.

    • It’s true that if the parent sends you a Form W-10 and you refuse to fill it out you face a $50 penalty. If the parent owes you more than this, it may still be worth it to tell the parent you won’t sign the form until they pay what they owe you. This may bring enough pressure on the parent to pay up. Or, you can take the parent to court. Going forward, you can’t report the money they owe you as a business expense. If you do give out parent receipts at the end of the year, make sure the parent signs a copy and keep one for your records. If a parent tries to claim a higher amount, your signed receipt will protect you. Lastly, to avoid this entire situation, require parents to pay you for the last two weeks in advance once they enroll. If they can’t afford to pay it all at once, accept small extra payments each week until they have paid up.

  4. I have one parent that I gave her my year-end statement with my EIN, signature, address and the total amount paid. Similar to what you showed as a sample. The Oregon Department of Revenue apparently didn’t think it was enough and sent her a Care Provider Statement for me to fill out. It is ridiculous! They want a detailed year-end summary,(what is that?) the typical days and times in my care, the total hours per month in my care, the amounts paid, with the dates and my rate, late fees charged and any refunds or discounts given to the taxpayer. Over half of her childcare was paid by DHS and the state could easily obtain that information. Is this going to be a new normal with tax forms to give to parents? I have never had to fill one out and am surprised they didn’t ask for the number of meals I served to each child for the year. Also, they put out a declaration to sign that I understand that the above income is considered taxable income. (like, duh.) It’s insulting that the state thinks a provider is an idiot that is clueless of running a business.

  5. I suspect you had to fill out this information because the parent was being audited and they wanted proof that the parent paid you the amount they said they did. I hope this is not something they are asking all providers to fill out!

  6. I provided a w10 with an incorrect amount paid. Upon acknowledging this, I gave the correct amount paid, but did not update the tax statement. The parent is demanding a w10 reflecting the true amount paid. Is this required? Are there any penalties if I do not supply an updated tax statement? I was under the impression that I was only required to provide the facility name, address, and ein. Advise please.

    • If a parent asks you to fill out a Form W-10 and you fail to do so, you potentially face a $50 penalty. However, the form does not indicate on it how much the parent paid. So, since you have already given them a W-10 there is no penalty for not giving them another one. You are not required to give the parent a receipt. If I was you I’d give them another receipt reflecting the correct amount the parent paid, but this does not have to include a new Form W-10 unless you want to.

  7. After on month of her child being in my family child care, a parent asked for a statement of how much she paid me. I was a bit confused and told her that since she started in January 2017, I don’t think I can give her a W-10 form since her child was not in my care in 2016. She then asked for a statement to be given to her in June 2017. I am confused. Are W-10 forms only given for the last year or anytime throughout the year?

    • You should only give a W-10 to a parent either at the end of the year or at the time they leave your program in the middle of the year. The W-10 doesn’t have a line on it that says how much the parent paid, so you would need to give the parent a receipt, not a W-10 for this purpose. If the parent is working for a company that offers a dependent care plan, she will need your tax id # to get reimbursed from her employer for child care payments. Ask her if she is on such a plan. If so, you can give her a receipt and your id #, but the W-10 is not used for this purpose.