I just started my son in a new in home daycare. I paid by check the first week and then she told me that she only accepts cash payments. I paid in cash the second week and asked for a receipt and she looked at me like I had 17 heads! Apparently she doesn't report this income on her taxes. Do I have any responsibility here? Should I be concerned?
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@yellowbird: Is she licensed by the state? I would expect an in-home would be reporting their income.
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@mediagirl: she is not licensed
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I don't know how things work tax wise in the US, but this would probably make me uncomfortable. Is your son the only child she watches? Or is this a business for her?
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This is common for unlicensed in homes around here, but their rates are usually quite a bit lower because you won't get the nice chunk of money back come income tax time. I much prefer to pay taxes and get the refund every spring so DD goes to a daycare centre
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@yellowbird: oh, okay. Then that is probably why she doesn't want to give you a receipt. She doesn't want you reporting the income. I'm guessing you didn't talk about this beforehand?
Does she have other children in her care?
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@mediagirl: we did not. This was sort of a spur of the moment change and I know there are things I forgot to ask. She watches my coworkers child as well and two other kids. I went with her because I had a personal recommendation and I needed someone stat. I really do like her, and it's not a huge deal because we've already surpassed our childcare write off for this year anyway, but it was surprising.
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I think it's kinda shady she wasn't upfront with you about this.
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@regberadaisy: what part do you think is shady?
Cash only payments or the Not reporting income part?
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@Mrs. Lemon-Lime: neither. I just think she should've been upfront about it. Asking someone to pay you under the table is kind of a big deal imo. I have no problems doing it personally and can certainly understand why. But I think she should've been upfront about it.
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@regberadaisy: how would that conversation go? "I am running an illegal business- I'm not licensed and I don't report this income. This means to you Miss Customer I only will accept cash and will not provide you a receipt."
IDK that many people that would so boldly state something like that. Well maybe if one of the questions was "how should I pay you?" Then cash would come up with the additional info about no receipts unless in the caregivers mind cash implies no receipts.
I get what she's doing, but I find it bizarre.
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@Mrs. Lemon-Lime: but what if miss customer was NOT ok about paying under the table? It's better to find out after? When she has already placed her kid at said childcare?
Believe it or not, in certain areas/cultures, childcare paid in cash is very common and not taboo at all. Despite, technically "illegal". -
I definitely would feel uncomfortable with this for a full time arrangement. But, given that you knew it was unlicensed, I feel like it was almost a given that it was under the table? I don't think I'd go and report her or anything, but I might look for other options. I'm not sure what your responsibility is here since it's not a household employee. There are many reason beyond the tax situation here that would make me nervous, though.
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@catomd00: ohhhh, I'm definitely not going to report her!
We are actually in the waiting list for a center my daughter just started, but he likely won't have a spot until January or February. I don't think she is shady at all. Unlicensed daycares are legal in our state but I think not reporting income is probably illegal but I don't really care as long as I won't get in trouble for it!
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Yeah I wouldn't be comfortable with an unlicensed day care, that only accepts cash, and doesn't report the income. That would be enough red flags for me to look else where.
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@yellowbird: I think it's great that you are comfortable there even with this one weird thing. I think I'd let it slide because of that. I don't think you would get in trouble but if someone reported the daycare provider, she would be the one who would be in trouble. You're probably getting a better deal since she's not reporting her income.
She's just acting like a babysitter rather than a childcare center.
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I dont know ,but my home sitter is liscened and I always get a receipt, I would want one for tax reasons!
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@yellowbird: As long as you are comfortable and LO is happy!!!!!
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I feel like this is something that should have come up before--"you can pay me in cash" or whatever. I know that ours takes checks and that she reports it. Most parents who pay for daycare want that tax credit at the end of the year, or pay with pre tax dollars (i know I do!) and if she's going to accept payment under the table like that, that's illegal, but many people do it after determining it is financially better. Just seems like something that she should have mentioned.
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@yellowbird: As long as unlicensed care is legal, then I don't see how you would get in trouble. There's not really any way for you to know for sure if she declares the income or not. I don't think the burden is on you to find that out in advance. I wouldn't worry about it for the short term.
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@regberadaisy: I don't think the cash payment is weird, but I find it odd not to get a receipt. Cash is king! A receipt is a record though.
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@yellowbird: If she's taking cash and not reporting the income that's illegal. Because of my ethics requirement I would not be able to work with her. I'd also worry about the fact that she is not paying taxes and she could be deemed a household employee and you would be the one responsible for taxes. I have not researched the matter personally but there are enough red flags that I would avoid it.
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Haha yes, you should be concerned. She’s committing tax fraud. She also likely doesn’t have the appropriate insurances in place if anything happens to your child, or someone’s else’s, in her care. Someone who cuts corners on basic, huge things like say, tax fraud, isn’t someone I would trust to conform to other important things.
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@yellowbird: I wouldn't be ok with it as I'm a CPA and ethically, it's just wrong. Plus, I need to claim my dependent care expenses and if she wouldn't provide a receipt, I would lose out on money because I couldn't get reimbursement for my dependent care FSA. Sounds like you don't have that issue?
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@NorthStar: I'm a CPA too.
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We go to an in home day care. It is licensed and we pay by check. DCP was very surprised when we asked for a receipt/statement at the end of the year for taxes. She was happy to provide one and her tax ID but she had never heard of the pre-tax stuff. I was really surprised because there are 12 kids there and she's operated for years. After we told her she started telling other parents.
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Yup, I'd be worried for all the reasons @yoursilverlining mentioned. Basically, she is lying and being unethical. I work hard and pay my taxes. Why would I trust someone who lies and is unethical with my kids, the most important thing in the world to me?
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I'd really push for a receipt... Don't you get tax credits back for paying for childcare?
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