Tax preparation for daycare providers About Family Child Care Taxes Payroll Service for child care providers Tax Tips Blog Make Payments Tax Tips en espaŮol Contact Us

Plan Now, Avoid High Taxes Later
An NATP Press Release for July 19, 2007

National Association of Tax Professionals (NATP) Appleton, WI – National Association of Tax Professionals (NATP) Appleton, WI – What is more exasperating than having to pay taxes? Understanding the constantly changing legislation affecting them! Yet, not fully understanding rights and how provisions work together costs taxpayers significantly every year. A mid-year tax review with an expert will help you. Here is why. Following are some common areas fraught with complex rules that cause taxpayers to miss valuable opportunities to leverage their options and lower their tax bills. Financial advisors and tax preparers are experts in these areas so you don’t need to be. Call your tax advisor for your mid-year review soon to discuss your financial plans and learn how you can save on your next tax return.


1) Overpayment or underpayment of taxes. Did you receive a big refund last year? If so, you overpaid and the government kept your money as a tax-free loan while you could have invested it and earned interest. Did you owe? Worse, were you stuck paying Alternative Minimum Tax? A mid-year review will help determine where you are and allow you to adjust your withholding now to avoid penalties later.

2) Saving for retirement – IRAs, 401(k)s, profit-sharing, pensions, employer-sponsored plans, etc. Many changes have taken place in the last few years regarding retirement savings plans. The plan you originally began with may have been advantageous when you started it, but it might not be anymore. So much has changed with these plans that it’s important to review them to see if they are still performing as you intended, and to find out if there are new products available that you are not taking advantage of.

Many taxpayers do not have an Individual Retirement Account (IRA) and are missing an opportunity to defray their taxes and save for their own future. One of the primary reasons for not having an IRA is not starting one. Begin now, even if it is only a few dollars a paycheck. The government has increased the amounts IRA holders can save, and those over age 50 can place additional catch-up amounts into their IRAs.

3) Medical savings accounts and health savings accounts. Try comparing your high premium medical insurance plan against a high-deductible plan combined with a health savings account (HSA). You may be surprised at not only which one is less expensive, but reap tax savings besides. And are you using any available flexible spending accounts through your employer? They are another way to reduce taxable income.

4) Estimated tax payments. Adjusting these payments now will avoid underpayment penalties at year-end.

5) Take advantage of deduction bunching. Some itemized deductions must meet certain thresholds before you can claim them. By being aware of these and managing your expenditures to fall primarily in one year, rather than spread over two years, you may realize significant tax savings. This applies to several expenditures, especially to medical expenses, property tax payments, and charitable donations.

6) Getting married? Or divorced? These life-changing events have very significant tax implications. A divorce or change in child custody arrangements can mean tax implications in several areas. Attempting to reach a divorce settlement or filing taxes without expert financial advice will most likely not be to your advantage.

7) Beneficiary designations, Powers of Attorney, wills, estate planning. Are these working advantageously for you? Do you even have them in place? This is the time to get your plans in order and be sure that tax changes have not changed how you intended these contracts to work.

8) Buying or selling stocks, bonds, real estate, or other investments. Many tax rules apply to all of these transactions. For example, a real estate like-kind exchange may work to your advantage. If you’re selling a residence, perhaps the exclusion for selling a principal residence applies to you. There are capital gains and losses, wash sale rules, long-term gains and losses, and a whole array of other rules when it comes to stocks and bonds. And don’t forget, investment expenses count as miscellaneous itemized deductions when used for the production of income. Handling these transactions wisely, rebalancing, and making changes are the name of the game with investments. Your financial adviser is worth his or her weight in gold here.

9) Financial planning is important when you have children and teens. Coverdell Education Savings Accounts (ESAs) and Section 529 plans are two ways to begin tax-deferred savings for a child’s education. Children grow up quickly, so begin these accounts early, and know how much you can add to them. Discipline yourself to save, and you help both yourself and your child.

Self-employed parents can hire their children or grandchildren and lower the overall family tax bill. The business also may benefit from hiring children under age 18, as their wages are exempt from social security and unemployment taxes paid from a parent’s sole proprietorship. Teens with earned income can make IRA contributions as well. However, if children plan to attend college, it is important to structure savings carefully to best work with college financial aid programs. When children are in college, remember to claim the education credits or the tuition and fees deduction.

10) Self-employed taxpayers and those with small businesses have many ways to plan for tax savings. This is another area where tax preparers prove their value. Several changes in recent years allow flexibility with carrybacks, carryforwards, employee benefit plans, expense deductions, etc. Certain small businesses that start retirement plans for their employees may even qualify for a tax credit to help recover the costs of starting up. The number-one rule-of-thumb here is to carefully document, backup, and substantiate all expenses in order to claim them on tax returns. If you have not done that, you will miss deductions. Timing of purchases and assets can make big differences on your tax return, and some of these things need to take place before year-end to qualify. Work closely with your tax preparer and plan carefully, using his or her advice.

The result of the calculated tax burden on your annual income tax return is not due to a few transactions, but is instead the result of how you’ve planned, invested, and leveraged your financial dealings throughout the year. Make this the year when you start taking a more deliberate and informed approach. Call now for that mid-year review.

For more information on this and other tax issues, consult a reputable tax preparer. Selecting the right tax professional will save you time, headaches, and oftentimes money. To find a professional tax preparer, look to NATP. NATP maintains a listing of professionals in your area at

Members of the National Association of Tax Professionals (NATP) strive to assist taxpayers with information and knowledge. NATP is a nonprofit professional association founded in 1979 and is committed to excellence in the tax profession. NATP’s national headquarters, located in Appleton, WI, employs over 40 professionals and 25 instructors. NATP exists to serve professionals who work in all areas of tax practice and has more than 18,000 members nationwide. Members include individual tax preparers, enrolled agents, public accountants, accountants, attorneys, and financial planners. Learn more at

Bookmark and Share

Posted on 2007-08-01 21:14:41

Most Employees are Subject to Overtime Rules

Do you have an employee claiming complete exemption from income tax withholding?

California Paid Sick Leave

FCC Payroll Late Reporting

IRS Relaxes Rules Regarding Depreciable Property

California is Still a FUTA Credit Reduction State

Child Care Business Liability Insurance is a Must

Minimum Wage Laws in California

Are Holiday and/or Vacation Pay Required?

Small Business Health Care Tax Credit

ObamaCare: Health Coverage Info for Employees

Here Comes Healthcare Reform

The Redleaf Complete Forms Kit on CD

Saving for Retirement with a SIMPLE IRA

Hiring and sometimes, unfortunately.....Firing

A helpful Hiring Guide for California child care providers

Tax rates were scheduled to rise for all taxpayers on January 1, 2013 . . .

Franchise Tax Board backtracks on property tax initiative

An easy way to pay California use tax?

Is a tax id number is needed to claim the Dependent Care Credit?

Hardship prevents some parents from paying their bill

How long should you save tax records?

Giving Gifts to Employees

Keep Track of Your Use Tax Purchases

The Self-Employed Health Insurance Deduction is a Wonderful Thing!

A New Barrage of Fake IRS Emails with Dangerous Links

Her Employee Just Got Married

Catching Up on Missed Home Depreciation

DayCare Providers: Should you set your business up as an LLC?

The Importance of Good Record Keeping

Are my education costs deductible? Can I count the class and homework time?

How much of this provider's cable/internet/phone service is deductible?

Provider's teenage children work in her business

Are his fiancee's property taxes an allowable business expense?

What is the cost of two part-time employees?

Summertime = Fix Up Time

Pesticides Are Poison

California Requirement: High income businesses must pay "use tax" online

Daycare worker wants to be an independent contractor

Child Care Provider's Own Children

Child care provider shocked at what she owes

Make Estimated Tax Payments Your First Priority

Protect Yourself from Calamity

Think it won't matter that much if you treat your worker as an independent contractor instead of an employee?

Treating your assistants as proper employees

Is the care provider's tax id needed for dependent care benefit plan participation?

CA Providers: Pay your workers more than once per month

Must daycare providers pay back their First-Time Homebuyer Credit?

Bonus Depreciation Rule extended for 2010

Tax Services

Foreclosures and Cancellation of Debt

FCC Payroll Account Set Up

Mother wants to claim the dependent care credit

Provider's income seems too low

How Much Will an Employee Cost You?

Employee transitioning to day care

Swapping free rent for child care help?

The Food Program Gives You Extra Income

Running a daycare business out of two homes?

What is my total out-of-pocket expense for wages of $500 per week?

2010 Federal HIRE Act

Low profit leads to trouble getting a bank loan

Should you do anything with personal grocery receipts?

Is Your Tax Preparer Familiar with Child Care Tax Rules?

Always Deduct Home Depreciation

Depreciation Schedules

The Time/Space Percentage May Not Be Right for Every Home Deduction

Why Don't You Ask for Outside Space Measurements?

Gifts for Volunteer Helpers?

Meal Rates Also Apply to Restaurant Meals

Here's how to request a child care provider's tax id number

What to do if a parent gives you a 1099

The Business % on Form 8829 Affects Many Day Care Business Expenses

An Exclusive-Use Room Will Increase Your Business Percentage

Energy Credit Limitation Will Affect Child Care Providers

A child care provider is concerned for a colleague with family helpers

Child Care Business Education Resources

Alison hears from a child care helper being treated as an independent contractor

How to Promote Your Business During a Recession

Should this parent give her child care provider a 1099 or a W-2?

IRS Reminds Car Shoppers about 2009 Tax Break

Advice for Out-of-State Daycare Provider

Can I write off a large vehicle as a business expense?

Question about categorizing shopping receipts

Ever Wonder if Your Microwave Oven Leaks Radiation?

Ignore Phony Social Security Administration E-Mails

FCC Payroll Service: Full Service at a Low Cost

Protect Children from the Dangers of Cell Phones

Want a Website Someday?

Hosting a Holiday Party for Business Purposes?

1099 Child Care Helpers Are Rare

Quarterly Estimated Tax Payment Due Dates

Make Estimated Tax Payments

Providers who are not licensed may miss out on the home expense deduction

Meal rates set in July are used to calculate food deductions for the following year

Visa holder wants to start a family child care

First-Time Homebuyer Credit

Cash for Clunkers signed into law on June 24, 2009

Making Work Pay Credit

Unemployment Benefits May Be Tax-Free in 2009

American Opportunity Tax Credit

Deduction for Sales Tax on New Motor Vehicles

Certain Family Employees = Lower Payroll Taxes

Required Minimum Distributions Waived for 2009

Energy Credit for Home Improvements

Energy Credit for Solar Property

What's the best software for our daycare business?

How should providers go about getting health insurance coverage?

Can providers write off payments to child helpers?

Wife earned $1,325 caring for children in 2008

Alison answers Michael Finney's childcare tax questions on "The View from the Bay"

How does this babysitter file her taxes without a W-2 or 1099?

Can I deduct the cost of items purchased before I got my license?

How do child care partners split the home deductions?

More than one car and other business auto concerns

Do I have to give out my tax id number and/or a total to parents?

Obtaining workers' compensation coverage

Give your Tax ID Number to Parents using Form W-10

Should I file separately from my spouse?

1099-MISC Forms are a Snap to Prepare

Aren't 1099-MISC forms due by January 31?

Workers' Compensation Insurance

Beware of Your Rights Before the IRS

Standard Mileage Rates for 2006 through 2018

Respond Quickly to IRS Notices

Child Care Providers Should Take a Home Inventory

Gifts From Parents May Be Taxable Income

Child Care Business Licenses

Child Care Workers are Almost Always Employees

Retirement Plan and IRA Contribution Limits

A Tom Copeland Daycare Tax Tip

Track Child Care Work Hours in the Home

Standard Meal Rates for Family Child Care Providers

Standard Meal Rates for Residents of Alaska

Standard Meal Rates for Residents of Hawaii

Summer 2008 Quick Tax Tips

Do You Have Debt Forgiveness?

Federal Housing Bill Passes on June 30, 2008

New Rule Will Result in More Taxable Home Sales

Take Advantage of Tax Savings in a Down Market

Converting a Traditional IRA to a Roth?

Health Savings Account Contribution Limits

My Letter to New Family Child Care Providers

IRS Rebate Payment Schedule Available

What About Giving 1099s for Household Services?

How to Find a Tax Preparer

Tom Copeland Daycare Tax Tip

Government Loses Billions as Sole Proprietors Underreport Their Income

Daycare Providers: Should You Incorporate?

Lessons in Back-to-School Tax Breaks

Child Care Tax Return Checklist

Child Care Providers and other Sole Proprietors: Get an EIN

A Tom Copeland Daycare Tax Tip

Here's a Tip: All Tips Are Taxable

Plan Now, Avoid High Taxes Later

E-mails From the IRS? Be Skeptical

A Tom Copeland Daycare Tax Tip

Payroll Tax Guide for Daycare Providers and Other Small Business Owners

When an Employer Pays 100% of Payroll Taxes

A Tom Copeland Daycare Tax Tip

Tax Realities of Renting Your Vacation Home

A Tom Copeland Daycare Tax Tip

Protect Your Charitable Deductions

Special Needs = Special Tax Awareness

Educator Expense Deduction Still Available for 2013

Family Child Care Provider Fights Back in IRS Audit

A Tom Copeland Daycare Tax Tip

Careful Recordkeeping = Big Tax Deductions

California State Disability Insurance Rates

Receipts Now Required for All Charitable Contributions

Family Child Care Taxes - Frequently Asked Questions

Tom Copeland Bio and Contact info
Tom Copeland is the nation's leading trainer, author, and advocate of business practices for family child care providers.
National Association for Family Child Care (NAFCC)
NAFCC 2011 Annual Conference
July 21-23, 2011
Las Vegas, NV
California Association for Family Child Care (CAFCC)

CAFCC 2011 Annual Conference
April 29-May 1, 2011
at the Embassy Suites
Milpitas, Silicon Valley

Community Child Care Coordinating (4C's) of Alameda County
Salvation Army Charitable Goods Valuation Guide
Franchise Tax Board Forms & Publications
IRS Forms and Publications
NAEA Tax Links
All State Tax Links
NATP Tax Links
Resources for Child Caring (formerly the Redleaf National Institute)
Internal Revenue Service
California Franchise Tax Board
Bay Area Cajun Zydeco Dance Calendar


© 2010, All Rights Reserved Alison T. Jacks / Family Child Care Taxes

Alison T. Jacks is an Enrolled Agent specializing in tax preparation and payroll services for California family child care providers. A graduate of the University of California, Berkeley, she is dedicated to effective client communication and attention to detail. Alison has a diverse clientele, but since 2007, she has been accepting child care provider clients only. The FCC Payroll Service was launched in 2010 to meet the needs of preschool and day care employers.

Alison is located in San Francisco East Bay City of Fremont, but she works with clients living throughout Central, Southern, and Northern California. She is a member of the National Association of Tax Professionals.

Our Privacy Policy

Website by Cooksey-Talbott Studio.

Special thanks to Cooksey-Talbott for his photographs of the Fremont Hills.