Can I use my daycare providers social to get a tax credit even though she is not licensed?
Tuesday, February 9th, 2010 at
7:44 pm
It is my understanding that a daycare provider must be licensed to be able to get a tax credit or use the Dependant Care benefit through work. But I hear of people using the social security number to get the credit even though they are not licensed. Is this legal?
Tagged with: credit • Daycare • even • licensed • providers • Social • though
Filed under: Daycare
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Her Social what? Status? Standing? Ideas?
There is no requirement that she be licensed. You need her business name, her social security number, and the amount you paid her last year. It would be up to the IRS to prove that the arrangement wasn’t for bonafide day care.
It is not legal. Also, she might get audited because I’m sure she didn’t include it as income.
Yes! Check your state. If she only cares for a few children (less than five), she may not be required to obtain a license.
sure, as long as you are paying her to keep your kids so you can work you should be able to put it on your taxes, that is why they also accept social security numbers and not just the provider id #s …..but just to let you know, they might compare the amount you say you paid her on your taxes with the amount she claimed as income on her taxes so you might want to make sure you are both on the same page about this (but if she gave you her social she is probably ok with it)
Yes, you can claim the credit. From http://www.irs.gov:
You must identify all persons or organizations that provide care for your child or dependent. Use Part I of Form 2441 or Schedule 2 (Form 1040A) to show the information.
Information needed. To identify the care provider, you must give the provider’s:
1. Name,
2. Address, and
3. Taxpayer identification number.
If the care provider is an individual, the taxpayer identification number is his or her social security number or individual taxpayer identification number. If the care provider is an organization, then it is the employer identification number (EIN).
You do not have to show the taxpayer identification number if the care provider is one of certain tax-exempt organizations (such as a church or school). In this case, enter “Tax-Exempt” in the space where the tax form calls for the number.
If you cannot provide all of the information or the information is incorrect, you must be able to show that you used due diligence (discussed later) in trying to furnish the necessary information.
Getting the information. You can use Form W-10, Dependent Care Provider’s Identification and Certification, to request the required information from the care provider. If you do not use Form W-10, you can get the information from:
1. A copy of the provider’s social security card,
2. A copy of the provider’s driver’s license (if the license includes the social security number),
3. A copy of the provider’s completed Form W-4, Employee’s Withholding Allowance Certificate, if he or she is your household employee,
4. A copy of the statement furnished by your employer if the provider is your employer’s dependent care plan, or
5. A letter or invoice from the provider if it shows the necessary information.
Records you should keep
You should keep this information with your tax records. Do not send Form W-10 (or other document containing this information) to the Internal Revenue Service.
Due diligence. If the care provider information you give is incorrect or incomplete, your credit may not be allowed. However, if you can show that you used due diligence in trying to supply the information, you can still claim the credit.
You can show due diligence by getting and keeping the provider’s completed Form W-10 or one of the other sources of information listed earlier. Care providers can be penalized if they do not provide this information to you or if they provide incorrect information.
Provider refusal. If the provider refuses to give you the identifying information, you should report whatever information you have (such as the name and address) on the form you use to claim the credit. Enter “See Page 2” in the columns calling for the information you do not have. On the bottom of page 2, explain that you requested the information from the care provider, but the provider did not give you the information. This statement will show that you used due diligence in trying to furnish the necessary information.
yes
It is my understanding that a license is not required . You need a EIN or a TIN. If the person does not have an EIN, you need their Social Security number as well as Name and Address.
No way – Jose
Yes, just tell her you need her social security number or because you are going to file taxes now. Just because she isn’t licensed, doesn’t mean she doesn’t pay taxes on it. At least this way- if she doesn’t pay taxes on it, she will be aware that you are using it on your taxes, and she does need to count that income, that way you won’t be getting anybody in trouble.