Who Should Get Your Receipt for Child Care Payments?

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Even though you are not required to give parents a receipt for their child care payments, it’s a good business practice to do so.

See my article, “The Truth About Giving Parents a Receipt.”

What should you do, however, when a person who hasn’t paid you wants a receipt?

This question comes up a lot in workshops I conduct across the country. Parents are asking for receipts because they want to claim the child care tax credit. A parent is entitled to claim the credit if they provide more than half the child’s support and live with the child more than half the year.

Let’s say that the mother is paying you and the parents are separated or divorced. The father says he has been paying the mother child support and wants a receipt so he can claim the child care tax credit. What do you say to the father?

You don’t know if the father paid the mother for child care. Don’t try to determine which parent is entitled to claim the child care tax credit. It’s none of your business.

You should give a receipt to the parent who paid you. So, tell the father you won’t give him a receipt and that he needs to talk to the mother about claiming the child care tax credit.

What do you do if both mother and father have paid you for child care throughout the year and each parent is asking you for a receipt? If you kept track of how much each parent paid you, give each parent a separate receipt for the amount they paid you. If you didn’t keep track, give each of them the same receipt and mark “Duplicate” on each receipt.

What if the grandmother or boyfriend wants a receipt? If they paid you for child care, give them a receipt, even if you suspect they aren’t entitled to claim the child care tax credit. They paid you, give them a receipt.

If the parent leaves in the middle of the year, give them a receipt at that time for how much they paid you for a partial year.

No matter who you gives your receipt to, always have the person to sign one copy and keep a copy for your records.

Tom Copeland – www.tomcopelandblog.com

Image credit: www.telegraph.co.uk



Categories: Parents & Taxes, Record Keeping, Record Keeping & Taxes

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9 replies

  1. I have been told by the IRS and my accountant that I should fill out a w-9 for my DCP and that at the end of the year my DCP should be giving me a 1099 MISC for taxes ….. ????? wondering what your thoughts are on this

  2. A W-9 is what an employee fills out so her employer knows how much income tax to withhold. You are not the employee of the parent. The parent should not give you a Form 1099 because she is purchasing services at your place of business. It won’t matter if the parent does issue Form 1099 because you have to report the time. I don’t know why the IRS and the accountant would say one the one hand you are an employee (W-9) and then say you are an independent contractor (1099). You can’t be both!

  3. The IRS said the W-9 is to give the parents my info — so they have it to fill out the 1099 Misc — For example the state who pays child care assistance to me on behalf of parents who qualify for it =- have providers fill out a w-9 and they send out a 1099 Misc by Jan 31 for people to file taxes — just like the IRS and my accountant told me

  4. If the state is asking you to fill out a Form W-9 they should then be withholding income taxes as your employer. But I assume they are not doing this because they aren’t your employer. It does make sense for the state to give you a Form 1099 at the end of the year so you know to report this as income. However, there is no situation where you would fill out Form W-9 for a parent. The parent should never be giving you a Form 1099. If they do, it’s not a big deal because you should always be reporting this income.

  5. I thought it was a W-4 that an employee filled out for employer for with holding to be figured and that a W-9 and that a W-9 is what a company issues to get a correct name, address and EIN so that they have the correct info to fill out for example a 1099 Misc

  6. I made a mistake in my comments above. I confused the W-9 with the W-4. Yes, the W-4 is for employees to fill out and give to their employer so the employer knows how much income tax to withhold.
    However, you should still not fill out the W-9 for parents. This form is only used when people hire independent contractors and the person hiring the independent contractor needs to file a Form 1099 to the IRS. Parents do not file Form 1099 when using child care providers.
    The Form W-10 is the form parents use to get the identification number of providers, not W-9. Parents file Form 2441 to claim the child care credit.

  7. http://www.irs.gov/uac/Form-1099-MISC,-Miscellaneous-Income-
    Form 1099-MISC, Miscellaneous Income
    File Form 1099-MISC for each person to whom you have paid at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest; at least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate; any fishing boat proceeds, or gross proceeds of $600, or more paid to an attorney during the year. and being self employed a child care provider (in Home) would be an independent contractor NOT an employee right ?

  8. Family child care providers who work out of their home are sole proprietors, not employees. Parents who pay providers should not issue Form 1099 to providers.

  9. Thanks for sharing. It is always good to give receipt because it helps in the problem as you mentioned in your blog. And yes it helps a lot in maintain the records which can be used in taxation.

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