Hi! I have a question regarding childcare expenses. My son goes to a licensed daycare 3 days a week and a "sitter" 2 days a week. I can provide receipts for the licensed daycare, but I pay the sitter in cash. How do I justify that expense? I won't be filing for a little while yet (trying to get a loan mod first), but since I have another child on the way, my daycare expense will go through the roof come August - more than doubled. Any suggestions? I don't want to pull my child (and new baby) from the sitter they go to - she relies on that income, not to mention that it will mess me up for my commute back and forth to work. Any advice will be appreciated. Thanks!
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A handwritten receipt from her should suffice. (Curiosity question: Is this a relative? If so, maybe have the receipt notarized...) It won't be reported to the IRS by the BK Court so she won't have to worry there either!
Good childcare is so important! Best wishes with the new baby blessing you soon!~~ Filed Over Median Income Chapter 7: 12/17/2010 ~~ 341 Held: 1/12/2011 ~~ Discharged: 03/16/2011 ~~Not an attorney - just an opinionated woman. -
Is there any particular reason you don't document/claim it on your taxes? You're giving up a tax credit. You may not be questioned on it - its not unusual to need to pay someone for childcare. But if you are, I think it could be a problem for this reason. (Meaning you're supposed to report it for tax purposes, if you don't the trustee could have a good argument for denying it.)~Staci
Not an attorney, and never played one on tv. My responses are based on my own experiences & personal opinions.)Comment
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But how do I ask her for a receipt? Even though the BK Court doesn't report to the IRS, I can just see her becoming worried that somehow the IRS would find out.Comment
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Does she know you are filing BK?~~ Filed Over Median Income Chapter 7: 12/17/2010 ~~ 341 Held: 1/12/2011 ~~ Discharged: 03/16/2011 ~~Not an attorney - just an opinionated woman.Comment
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Start paying by personal check.
If she has limited income - you might both be better off to report it. She might be eligible for earned income credit, you for child care credit.~Staci
Not an attorney, and never played one on tv. My responses are based on my own experiences & personal opinions.)Comment
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I can't claim it, because she doesn't claim it. The tax credit I am giving up isn't worth getting her in trouble. Right there on the 1040, they ask for names and everything (if I remember correctly).Comment
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No, I've only told one person that we are filing.Comment
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Well her not knowing makes it harder to ask for a receipt. Do you pay in cash or a check?~~ Filed Over Median Income Chapter 7: 12/17/2010 ~~ 341 Held: 1/12/2011 ~~ Discharged: 03/16/2011 ~~Not an attorney - just an opinionated woman.Comment
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I have seen others on here in the same situation and a handwritten receipt/letter was sufficient. (ETA: All districts are different make sure to ask your lawyer)
Staci, if she claims it as income (the sitter), she would likely have a plethora of self-employment docs to file or it could impact other funds she is receiving not to mention issues with homeowners insurance or apartment management if any...~~ Filed Over Median Income Chapter 7: 12/17/2010 ~~ 341 Held: 1/12/2011 ~~ Discharged: 03/16/2011 ~~Not an attorney - just an opinionated woman.Comment
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I brought up the issue with my attorney. I'll post their reply when I get it...Comment
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ok, I promised to post the reply from my attorney. They said, "We won't need receipts. The mere fact that you work full time and have two young kids is proof enough!" I hope they are right. I'm not going to worry about it now. I'll worry about it later if it comes up.Comment
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I may be in a similar situation. We have always paid a family member for childcare since last February. When it was my husband's sister, we paid her cash or check. We will put this information in our tax return. Now, I pay my mother with a check so that we have records. I hope this is acceptable to the trustee. And, I can pull up local infant care costs in my neighborhood ($1200/month) and show where we are paying my mother less.Comment
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Just an FYI, my child care was never questioned...Comment
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Mine was questioned and the wanted rec for everything! My kid is older! I sure don't miss those infant care costs! Horribly expensive!Discharge date: October 2017 (will it ever get here?)
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