January 28, 2010

Annual 1099 Reminder
It's nearly February, but there's still time

Family child care providers, like other business owners, must give a Form 1099-MISC to any independent contractors paid $600 or more during the prior year. Many providers don't have any contractors providing services directly to their businesses, but they do often have some home service providers.

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.

1099s are supposed to be prepared by January 31, but you can follow these special February 1099 instructions if you act now.

Preparing 1099s is protection for you, not for the benefit of the service provider, as many people think. If your tax return is audited and you didn't prepare a required 1099-MISC, the auditor will automatically disallow your deduction of payments made to the contract service provider. You will owe additional tax and penalties, as a result.

A direct 1099 service provider could be a tutor, storyteller, puppeteer, or the contractor who built your cubbies and play structures. We are talking about independent business people providing services to your business, not general child care helpers. If you have regular hired help, treat such workers as employees and give them a W-2.

A substitute care provider qualifies as a 1099 service provider if the person is a true independent contractor who advertises to the public, gives you a tax id number, provides services to multiple child care providers, and has a business contract for you to sign. You should also receive an invoice or bill.

1099 home service providers are quite common and include cleaning services, yard services, painters, window washers, handypersons, etc. You should prepare 1099s for any home service providers.

Once again: The deadline for providing 1099-MISC forms to your contractors paid $600 or more is January 31. Don't worry if this slips a bit, because the true deadline is February 28. You must mail your 1099-MISC forms to the IRS by that date. Luckily, 1099s are a snap to prepare.

Meal Allowance Rates
Rates for 2009 & 2010

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

Standard Meal Allowance Rates for 2009 income 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 income 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)

Local Family Child Care Tax Workshops
Presented by 4C's of Alameda County

It's important for all child care business owners to learn as much as possible about taxes and record-keeping. Alameda County providers, please check out these workshops coming up. All others, look for educational opportunities in your community.

For further information or to register, contact Iris Lin at 510-584-3117 regarding the Chinese workshop or Pam Buckholtz at 510-584-3114 regarding the Farsi and Tom Copeland workshops.

Family Child Care Tax Preparation in Farsi
Tuesday, February 2, 2010
6:30 - 8:30pm
Hayward, CA

Treat Helpers As Employees
You can still provide a W-2 to your worker if you act quickly

As covered in the 1099 article to the left, persons you pay to come into your home and work in your family child care business are almost always your employees. Both you and your employees need to pay certain payroll taxes and you must provide a Form W-2 your employee by January 31.

As with 1099s, you do have some wiggle room on the January 31 deadline. But do observe that W-2s must be sent to the Social Security Administration by February 28.

If you neglected to withhold taxes from your worker's pay last year, you can still get caught up and report proper wages for 2009. You must act now, however, and you will probably need help. Special calculations will probably be required because of the employee taxes that weren't withheld.

For a limited time, we at Family Child Care Taxes are available to help you catch up for 2009, if you come on board for 2010 with our new payroll service.

Our payroll service is conveniently web based and open to all California child care employers. To provide flexibility, we offer both full service payroll and a budget service. We have expanded beyond taxes and into payroll because of the need for quality, affordable family child care payroll options.

Please contact us with any questions.

CAFCC 2010 Annual Conference
at the San Francisco Airport, April 23-25

California providers, mark your calendar and plan to attend the California Association for Family Child Care Annual Conference. It will be held at the Crowne Plaza Hotel, San Francisco Airport, April 23-25, 2010. The theme this year is "Overcoming Adversity - Reaching for Success."

Please come to the vendor area and say "hi" if you attend the conference. Bring me your tax and record-keeping questions!

Due to interest at Los Angeles conference last year, I will have a number of Tom Copeland's Redleaf Press child care business publications available for sale in San Francisco. Pick one up from me and avoid shipping charges.

Hiring Practices in the Family Child Care Business
with Tom Copeland
Thursday, February 18, 2010
6:30 - 9:30pm
Hayward, CA

Taxes and Recordkeeping Update for 2009
with Tom Copeland
Tuesday, February 23, 2010
6:30 - 9:30pm
Fremont, CA

Chinese Business of Family Child Care:
Taxes and Record-Keeping
with Alison T. Jacks EA (yours truly)
Wednesday, March 17, 2010
7:00 - 9:00pm
Hayward, CA