November 27, 2009

Quality, Affordable Payroll Service Launching Jan 2010
Contact me now if you need help for 2009

I have become frustrated with the payroll options open to my clients with employees. Child care providers generally have just one or two helpers, and yet the cost for full service payroll can be high. Nevertheless, it is very important for providers to follow employment tax rules and treat helpers as employees.

This explains why I am launching my own daycare-specific payroll tax service for California providers on January 1, 2010, offering both full service and a lower cost budget service. For further details download this Payroll Service Flyer and watch for the debut of our new, secure payroll page soon at www.familychildcaretaxes.com.

In the meantime, I am happy to hear from you if you need help for 2009, whether you are hiring now, or need to catch up on the proper paperwork back to the beginning of the year. Now is a great time to get in compliance and be ready to give your helper a W-2 in January, as required.

Hosting a Holiday Party for Business Purposes?
The guest list affects your tax deduction

From working with family child care providers, I know that many of you host events where food and/or entertainment is provided.

The question is whether all of the costs associated with such parties are deductible on your income tax return.

The answer is, "It depends."

I'm not talking about parties you have for day care kids during business hours, which are always 100% deductible.

My comments concern evening and weekend gatherings for the kids and their families, in which case the guest list can determine how much of your costs are allowed on your tax return as an expense.

Make Estimated Tax Payments
It's never too late

Wage earners have taxes withheld from their paychecks. Child care providers and other self-employed persons with a positive income are required to make estimated tax payments. Otherwise, an underpayment penalty may show up on your income tax return, which is calculated on Form 2210 (instructions).

To avoid the underpayment penalty, you generally must make quarterly payments during the year. Total payments must equal the lesser of 100% of your total federal tax for the prior year or 90% of what you actually end up owing for the current year. This is why they call it "estimated tax." You estimate what you will owe and send it in. Or you can fall back on the "safe harbor rule" and calculate payments based on your prior year federal tax. (Note that for higher income taxpayers - generally above $150,000 - the safe harbor percentage goes up to 110% of the prior year tax.)

If you haven't made any payments yet this year or have missed payments, it's never too late to catch up and at least pay something.

Meal Allowance Rates
Rates for 2009 & 2010

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 2009 tax returns
(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)

Standard Meal Allowance Rates for 2010 tax returns
(in the continental U.S.)

$1.19 for each breakfast
$2.21 for each lunch or dinner
$0.66 for each snack (up to 3 per day)

Don't Give your SSN to Parents
Do you need a tax id for your business?

Self-employed business owners, including day care providers, need an Employer Identification Number (EIN) if they have employees. Day care providers, with or without employees, have another reason to obtain this tax id number for their business: IDENTITY THEFT PREVENTION.

We're getting close to the end of the year when parents will be requesting your tax id number for the purpose of claiming the federal Credit for Child and Dependent Care Expenses. They may even ask you to fill out a Form W-10, Dependent Care Provider's Identification and Certification. (Most parents don't realize this is the official form they should be using.) Many providers give out their social security number, but it is much safer to give parents an EIN.

Want a Website Someday?
Register your business name now - don't wait!

Some of you already have a website for your business. For those child care providers still thinking about it, please heed this advice:

Stop by GoDaddy.com (a low cost registrar) right now and do a domain search on your business name.

If your business is "Harriet's Happy Kids," type "harrietshappykids" into the domain search box and see what comes up. Hopefully, harrietshappykids.com is available, in which case I urge you to waste no time in buying the domain before someone else does. Even if you don't need it now, it's worth $10-$15 per year to secure the rights to your business domain name. Otherwise, beware of the domain troll. He could be lurking under a bridge near you!

The domain troll caught up with me and this is my cautionary tale.

Protect Children from the Dangers of Cell Phones
Lifetime radiation exposure will be high

I recommend you watch this video:

Cell Phones & Cigarettes:
What do they have in common?

In eight minutes it presents some of the health effects associated with cell phone use especially by young people and pregnant women. It also draws on similarities between cigarette smoking and cell phone use. A must-see for teenagers and parents......and child care providers.

It was produced by Magda Havas, PhD, Professor of Environmental and Resource Studies at Trent University in Canada.

Ignore Phony SSA E-Mails
Fake Social Security Administration messages going around

Back in September, I warned clients to ignore the glut of e-mails being sent with the title "Notice of Underreported Income" and seeming to come from the Internal Revenue Service (IRS).

Now I'm receiving multiple e-mail messages seemingly from the Social Security Administration (SSA) with titles like this:

Watch for errors on your Social Security statement
Review your annual Social Security statement

Stop a minute and THINK before you click on the links in such messages. They often deliver computer viruses.

REMEMBER:

>>Government agencies do not send out notices or other unsolicited messages by email.

>>Government agencies will not ask you to follow links in messages.

>>Always be suspicious if you receive unsolicited e-mail from the SSA or the IRS or any other entity (such as your bank or credit card company).