Tax Tip Number Two

It is time for tax tip number two! My tax tip for this week is about how to report daycare totals to parents. You are required by law to furnish each family with a report that shows how much they paid you in child care expenses for a year. You also need to supply each family with your legal name, your business name if you have one, your address, your phone number, and your tax ID number or social security number, whichever you are using. The easiest way I have found to do this is to provide each family with a W-10. This is an IRS form that you can download from the website www.irs.gov. Once you get onto the website, use the search function and type in w-10. It will only pull up one option. Click on the W-10 and download it. Then you can print it out. This form is used to supply your information to your families. However, it does not include a place to put the amount paid to you. What I did was to modify the form. This form does not have to be filed with a family's taxes, so it is ok if it is not an original form and it is ok to change the format. I looked at the form W-10 and made my own version using my word processing program. I made sure my version contained all of the information required on the original form. Then, instead of including the lengthy directions included at the bottom of the original form, I created a section that listed the name of the family I was supplying the form to, the children's names, the family's address and phone number, the amount charged to them for daycare that year, and the amount they paid for daycare that year. Then I printed out multiple copies of my new form and filled one out for each family. Don't forget to provide these forms to the families of ALL of the children you cared for in that year, including families that may have left you earlier in the year. Refer to your receipt book to make sure you include all families and to calculate totals. I always included a short letter with each form letting the parents know what the form was and that they did not need to file the actual form with their taxes. Rather they should keep it with a copy of their taxes to reference in the future if needed. My parents loved receiving an official form that contained all of the information they needed for their taxes!