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When I used a private in-home person to take care of my son, it was a cash deal. No taxes. Once I used a daycare center, then that changed. I would absolutely let it go. One of the reasons that she is cheaper, is because she does not have to pay taxes. Can't believe you would even think of insisting on that.
Well that depends on how you define that statement. She is required to pay taxes and most likely simply chooses not to do so
Last year we signed our daughter up for in home daycare. We drive her to a woman's house who watches her and ~6 other kids for $65 a day.
The cost for our area is very reasonable as typically places charge $85 a day or more and they don't have flexibility to not pay for days you don't need them to watch your kids. My wife is a teacher so she gets summers off and lots of holidays and this woman doesn't charge us for that time.
I asked her about claiming our child care costs for our taxes and she casually mentioned that with cash customers she doesn't report the income. She asked if we wouldn't claim it. We really like her, as does our 1 year old. She has taught her sign language and is overall really good and comes highly recommended among local parents.
Moral stance aside and speaking strictly financially, what would you do?
1) Demand she allow us to claim the costs for a refund on our taxes
2) Give her a break and don't push it since she is convenient, close, does a great job, and other places are more expensive.
3) Other - Work out a compromise, switch providers all together.
Curious to hear everyone's thoughts!
Looks at you, wanting all the benefits of cheaper quality child care and now you are considering going after this woman because of your tax credit? You arent giving her a break by letting it go, you are accepting your part of an understanding that you should have understood when you hired her.
We had no reason to think it was cheaper other than being an at home daycare situation. She wasn't upfront about skipping claims and just said she preferred to be paid in cash, which we did.
I wonder who you think you are talking to here. Are you testing out this lie on the group to see how it goes over? How old are you? Nobody is falling for it. If you pay a service provider in cash you know exactly why they prefer it.
I wonder who you think you are talking to here. Are you testing out this lie on the group to see how it goes over? How old are you? Nobody is falling for it. If you pay a service provider in cash you know exactly why they prefer it.
Exactly I’m not buying it either it’s a bit comical to me to try and claim
I'm willing to give the OP benefit of the doubt...not so much that they thought about it early on and decided/believed that it was all on the up and up all along, but more that probably they did not think of it much at all until now. Not everyone goes through life contemplating the tax consequences of everything they do (although the longer I've been an adult, the more I've felt like I must!)
So it's just really a matter of principle for them. I feel like, on one end of a spectrum is continuing with the arrangement and letting her continue with her tax evasion, and not claiming the credit. You are helping her to not get caught, but I have not heard of anyone getting in trouble with the law for aiding and abetting in a situation like this...if anyone pays any legal penalties, I think it would be her, if she were found out. On the other hand, there is insisting that you are going to take the credit and insisting that she needs to obey tax laws, which could be hard to do if you don't have any kind of a Tax ID or SSN for her (unless things have changed, you need that info to claim the credit, I did back when I had kids in childcare.)
Middle of the road option here would be to seek another provider, who operates above-board. You will probably have to pay more, and you'll just have to accept that it's the cost of getting your tax credit... And if you are uncomfortable with participating in an illegal situation, but don't want to get her into trouble in some way, then that's the route I'd suggest.
I'm willing to give the OP benefit of the doubt...not so much that they thought about it early on and decided/believed that it was all on the up and up all along, but more that probably they did not think of it much at all until now. Not everyone goes through life contemplating the tax consequences of everything they do (although the longer I've been an adult, the more I've felt like I must!)
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It has to be the largest/main reason people insist on being paid in cash even more so in reoccurring transactions.
Last year we signed our daughter up for in home daycare. We drive her to a woman's house who watches her and ~6 other kids for $65 a day.
The cost for our area is very reasonable as typically places charge $85 a day or more and they don't have flexibility to not pay for days you don't need them to watch your kids. My wife is a teacher so she gets summers off and lots of holidays and this woman doesn't charge us for that time.
I asked her about claiming our child care costs for our taxes and she casually mentioned that with cash customers she doesn't report the income. She asked if we wouldn't claim it. We really like her, as does our 1 year old. She has taught her sign language and is overall really good and comes highly recommended among local parents.
Moral stance aside and speaking strictly financially, what would you do?
1) Demand she allow us to claim the costs for a refund on our taxes
2) Give her a break and don't push it since she is convenient, close, does a great job, and other places are more expensive.
3) Other - Work out a compromise, switch providers all together.
We had no reason to think it was cheaper other than being an at home daycare situation. She wasn't upfront about skipping claims and just said she preferred to be paid in cash, which we did.
She is also licensed and insured, we made sure of that before signing up with her. The only thing she doesn't have is the certification on her home to be certified safe for daycare (home is pretty old).
Ethics aside....
wouldn't it basically be a wash? If the day care provider pays the tax, but the parent claims the payments as a deduction, it works out nearly the same for both people and for the government, right?
Again, ethics aside (not saying ethics aren't important)....
I can't imagine that the stability of our tax system is dependent upon the relatively tiny amount of money that stay at home day care providers earn. Big bailouts for major corporation? Heck yeah! Free stimulus money for everyone? Heck yeah! We need more day care providers, not fewer, so maybe saddling them with more paperwork isn't the best way to go about it.
Taxes are why I make no attempt to sell my art on Etsy, for example. I choose to give it away for free rather than deal with reporting taxes on such a piddly amount of earnings.
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