January 9, 2009

1099-MISC Forms are a Snap to Prepare
Act now and get the forms for free from the IRS

As business owners, family child care providers must give a Form 1099-MISC to any independent contractors paid $600 or more for services provided to your business during 2008. And you must do this by January 31. If it's February already, don't despair, follow these special February instructions now. I recommend that you also give 1099s to any home service providers paid $600 or more.

Sending 1099s is not optional. They are mandatory, unless the service provider is a corporate entity. If your service provider happens to be an attorney, however, then a 1099 is always required, whether the attorney's business is incorporated or not.

Preparing and filing a 1099-MISC protects your business tax deduction. If you neglect to prepare a 1099 and later get audited, your deduction of the fees paid to the service provider will automatically be disallowed. That's a potentially hefty and immediate increase in tax for you, plus interest and penalties.

Important: 1099s cannot be used for workers who should properly be treated as your employees (and note that day care workers are almost always employees). You must provide them with a Form W-2 instead. Refer to the IRS website for help in determining how to treat your workers: Independent Contractors vs Employees.

If you need payroll forms guidance, refer to my Small Business Payroll Tax Guide.

To find out how easy it is to prepare your own 1099-MISC forms, read on.

How to Find a Tax Preparer
Advice for Family Child Care Providers

The fact of the matter is that there are not nearly enough tax professionals out there specializing in child care taxes. Not enough to meet the demand for sure. If you are a child care provider looking for help at tax time, this can be very frustrating.

I work with child care providers all over my home state of California, so if you also call California home, feel free to contact me. I am located in the San Francisco Bay Area city of Fremont and I have family child care clients up and down the state, from Santa Rosa to Stockton, from Paso Robles to Bakersfield, and from Los Angeles to Orange County.

Many people are initially surprised at the idea of working with a tax person located many miles away, but it is amazingly easy. In fact, I never see a good number of my local clients! They find it much easier to send me their information via US mail, fax or email.

This article was written to help out-of-state child care providers, as well as California providers who prefer to find a tax professional in their local area.

Local Tom Copeland Workshops
February 2009 in Hayward & Fremont

We are very lucky that 4C's of Alameda County is again hosting two Tom Copeland workshops in February. If you live close enough to come, I highly recommend that you attend. I always do. It's good to hear what's on Tom's mind, pick up new insights into record keeping and taxes, and see what droll humor he will throw at us this year.

Taxes & Record Keeping Tax Update for 2008
Thursday, February 12, 2009
6:30pm - 9:30pm
Hayward, CA

Hiring Employees in Your Family Child Care Program
Tuesday, February 17, 2009
6:30pm - 9:30pm
Fremont, CA

To register, download and mail in 4C's Tom Copeland Workshop Flyer. Contact Pam Buckholtz at 510-584-3114 for further information.

Meal Allowance Rates
Rates for 2008 & 2009

Family Child Care Providers may deduct their actual grocery cost or use the standard meal rates shown below to calculate their deduction. Records must be kept of attendance and meals served.

Standard Meal Allowance Rates for 2008
(in the continental U.S.)

$1.11 for each breakfast
$2.06 for each lunch or dinner
$0.61 for each snack (up to 3 per day)

Standard Meal Allowance Rates for 2009
(in the continental U.S.)

$1.17 for each breakfast
$2.18 for each lunch or dinner
$0.65 for each snack (up to 3 per day)

We Welcome New
Family Child Care Clients
You can make an office appointment or
arrange to send me your tax information

I recently began setting up my tax season schedule by reserving appointment times for returning clients. This week we mailed 2008 tax preparation information packets to new and returning clients. Prospective California clients who did not receive a packet are welcome to request one now. Now is also the best time to make an office appointment for tax preparation, before your choice of times dwindles. Reach me by email or call 800-616-1268.

For further information about my services, please read my Frequently Asked Questions.

CAFCC 2009 Annual Conference
in Los Angeles, April 24-26

California providers, please mark your calendar and plan to attend the California Association for Family Child Care Annual Conference. It will be held at the Four Points Sheraton at LA Airport, April 24-26, 2009 and I expect to be presenting a one or two workshops on taxes and record keeping.

The theme this year is "Uniting Together for Change" and the hope is to unite all providers throughout the state with one vision and as one voice for family child care. Information on registration, workshops, vendors and hotel rates will be listed on the CAFCC website at www.cafcc.org by next week.

One of the things that most impresses me about the child care profession is the dedication I see among many providers towards their businesses and towards professional networking and education. CAFCC and other provider associations provide a strong network of support for providers and uphold high standards of care and best business practices. Take advantage wherever and whenever you can of opportunities to learn and get involved.

Day Care Workers Are Almost Always Employees
Independent contractors are few

Persons you pay to come into your home and work in your family child care business are almost always your employees. It doesn't matter how few hours they work or whether you hire them for one day, one week or the whole year.

The only circumstance where a person helping you care for children is not your employee is if this person is in the business of providing substitute care for a number of providers. You might also have an independent contractor if you ever engage the services of a storyteller, tutor, puppeteer, or other specialized businessperson.

Persons described in the previous paragraph may be treated as independent contractors. Be sure to obtain a federal tax id number. Give the person a Form W-9 to fill out at the beginning of the engagement. You must have written statements, bills and/or invoices from the service provider and should use a contract with substitute care providers. Give the person a Form 1099-MISC by January 31, if you pay her $600 or more during the year. Failing to provide a 1099 means that you will automatically lose the deduction if audited.

If you feel tempted to treat your worker as an the independent contractor when you shouldn't, read on to learn how this can come back to bite you severely.