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Hey guys im writing this because im a self empolyed child care provider i watch 3 kids in my home two i watch from 9am to 5pm monday thru friday an the oldest i watch from 3pm to 5pm the mother pays me in cash weekly an i provide snacks for the children while they are in my care the mother provides the meals.an when i flied my taxes the lady at jackson hewitt took my information from the letter the mother wrote but didnt make a copy of the letter for the IRS an now im waiting for a letter from the IRS is that all i would need to show proof that i watch these three kids,is the letter from their mom saying how much she pays me an that it is in cash an the time an days the kids are in my care..thank you in advance with any answers to my question.
1) The method of payment -- cash or check or credit card -- is always irrelevant -- IRS wants you to report all income you earned. 2) The time you watch the kids -- is irrelevant. The cost of their snacks is your expense and you should have taken a tax deduction. 3) You can always ask the mother to re-issue the letter -- when the IRS asks you to present it -- and you can write "hand copy" on it. Human beings work for IRS, despite of the wide-spread belief to the contrary. 4) Depending on your state, city, county -- did you have to register your home daycare facility? Or get a business name? Check into it - you may be required to do it.
You should have asked to be paid by check, not cash. At the very least, you should have been deposited the money every week into your bank account before spending it. The letter from the mothers should have been along the lines of her name, address, SSN, dates, totals, etc. You are now trying to prove the impossible--that you got paid as much as you said you did, that you claimed all reasonable expenses--because duh, you want to claim EIC and ACTC for your children over and above any SE tax you owe. The IRS sees all such tax returns as potential scams.
Sure you can have a name, and you can get a federal tax Eustis number, too, so you don't have to give parents your social security number. Yes, for taxes, you have to report ALL income. ALL of it. Drop ins, one shots, cash, etc. regardless of declaring or not, over or under the table, etc. Anything else is tax evasion.
Sch C and Se and let's hope you kept good records of all your income(not just the one who gave you a statement) and expenses