Reporting End of Year Income and Expenses

Family child care providers need to follow these rules about reporting their income and expenses for the month of December:

Report your income in the year you receive it. So, if you got a check from a parent on December 31st for care you are going to provide in the next year, you must report this as income in December. This is true even if you don't deposit the check until the next year.

If you receive a check from a parent on January 3rd for child care you provided in December, report this as January income. You can save a little money on your taxes if you ask parents to pay you in January for December care.

Report as income money you received from the Food Program in the year you receive it. So, if you get a check in January for food you served in in the previous year -  report this as income in January. If your Food Program sponsor gives you a year-end report showing how much in reimbursements you received in a year, this may not match with what you report as income on your tax return. Don't worry about this. Keep your own records showing what year you actually received the money and you will be fine.

Claim expenses in the year you incur the debt for the expense. If you write a check or pay for an item with a credit/debit card on December 31st, record this as an expense in December, even though the check and credit card won't be debited or charged to you until the next year.

To save some money on your taxes, buy extra supplies and other items you will need in December of the year.

Tom Copeland - www.tomcopelandblog.com

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For more information, see my book Family Child Care Record Keeping Guide.