Are late fees considered "taxable"

[Other Mummy]

Do I include late fees in my clients' receipts? I had a client that arrived 40 min late last night to pick up my sibling DCK's. :no:

So today, I was just about to write her a receipt for weekly fee. Do I include the late fee?

[Other Mummy]

Opps.. meant to include that she paid me her weekly fee and her late fees this morning. Should I just combine the two?

[jazmic]

I would include it for tax purposes. It's still part of your service fee.

[sunnydays]

I agree with Jazmic...it is money earned...I don't think it matters how it was earned. It is taxable and therefore you have to provide a reciept.

[Inspired by Reggio]

Yes ~ I claim ALL fees collected.

If you worked 'overtime' in a factory you would be required to pay tax on that income!

[Inspired by Reggio]

The only thing I do not put on their 'childcare tax receipt' is LATE PAYMENT FEES aka their fees were due on Friday and they forgot so I charged them a late fee of $10/day or BANKING FEES if they were to have an NSF cheque because those are not 'childcare related' expenses for them but rather poor budgeting expenses and therefore not a tax deduction ;)

I do however claim both those as 'income' because they did pay it too me .... any NSF charge also goes under my own banking expenses so it would cancel each other out at least.

[daycaremum]

Nope. I add it on the bottom of their receipt in red just for information purposes, but it states right in my contract that they are not to be claimed as daycare fees. At a centre, if you pick up late, you hand the late fees in cash right to the staff member who had to stay after closing for you. For paying late, that is a penalty. I do the books for my husbands business and any late penalties for late payment are not included as an expense. Late payment/pick up fees are not payment for childcare, it is a penalty for breaking the rules.

[Inspired by Reggio]

Personally my $1/minute late pick fees are not charged as a penalty but COMPENSATION for my time at having been required to work overtime hours ~ the PENALTY for being LATE in my contract is immediate termination of your contract if you make it a habit ... aka you get one FREEBIE pass in a fiscal year where you could not get your shit together to get someone here in time for pick up your kid regardless of the 'reason' you make it a habit and you are gone ;)

Otherwise IME the late fee is not a penalty at all ... when i worked in centre care the parents come in waving the fee like a get out of jail free card for their poor behavior ~ here's your fee so we are all good at you having been kept late yet again ... it just becomes their 'normal' to have to pay that and in exchange they feel 'entitled' to be late cause they are paying you :rolleyes:

As for are 'late fees for pick up' something that should go on their 'childcare tax reciept' to use for a deductible childcare tax credit ... totally think that truly depends on how you look at the rules for expense in the first place?

I know some centres I worked at the late fee went through the 'office' as a form was filled out and signed indicating how late the client was and so forth and the client had to 'sign agreement' than were 'billed' and the provider just got paid their 'normal wage' for having stayed late or they got paid overtime depending on the centre but it was all through their 'pay cheque' so being claimed as income by the employee and revenue by the company so no 'grey area' in an audit by CRA.

Others as mentioned the staff got it directly in full from the late client and it bypassed the office recording entirely cause it was deemed as an 'arrangement between the two parties' and they left it up to the staff to CHARGE IT and therefore to claim that income from the client or not and for the staff to issue a receipt for that or not ... some of my peers did charge and others did not like conflict andsso would just let it slide time after time!

Either way if they 'charged it' the CRA income tax forms 'technically' require those staff to still claim that late fee as income ~ it goes on the 104 line on your income tax under 'other employment income' .... income earned that does not show up on any T4 slip ... you provided a service and received financial remuneration you are suppose to claim that income.

Another point of consideration is childcare expenses are only 'tax deductible' for a client if they are incurred for the specific reasons listed on the long form of income taxes CRA (http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/214/wht-eng.html) ... but we are still required to write out a receipt for ALL childcare offered and paid for through our business cause well how do we know if the parent is receiving care for an 'allowable reason' or if they are just wanting a 'socialization program' for their kid that is totally up to them to be honest with CRA when using it as a 'deduction' or not?

How do we prove if they are late cause they had to work late or stay at school late or were 'researching or studying' and lost track of time verses out at the gym or grocery shopping we still provided 'childcare services' during that time regardless? .

Based on complaints of a lot of providers we provide A LOT of care to children whose parents are not 'working / in school / being paid to research' in order to meet the criteria of an 'allowable childcare expense deduction' but we are still expected to issue a receipt regardless so what is the difference with them having been 'late' and incurred an additional fee as a result?

For me it is just easier to stay out of the gray area and claim it ALL since it is such a small amount for me anyway than having a client I ended up terminating for chronic lateness 'complain' to CRA on me that I did not record ALL their childcare expenses and have myself get audited or something :(

[Momof4]

I always put the total payment on the receipts because it's all my income. I put a little notation at the bottom of the receipt showing the amount of the late fee so it's clear at the end of the year when I give out my tax receipts to the parents (and to me - who can remember!) why it is a different amount.

[daycaremum]

Nope. I add it on the bottom of their receipt in red just for information purposes, but it states right in my contract that they are not to be claimed as daycare fees. At a centre, if you pick up late, you hand the late fees in cash right to the staff member who had to stay after closing for you. For paying late, that is a penalty. I do the books for my husbands business and any late penalties for late payment are not included as an expense. Late payment/pick up fees are not payment for childcare, it is a penalty for breaking the rules.

I just wanted to add to my post that I give one freebie for late fees to be kind, but remind the parents that I should be charging them the penalty. Most will offer to pay it anyways. If it happened again it would be charge for sure and there would be a warning attached that if it happens again I would no longer be able to provide care for them. I don't have issues with late pick ups or late payments in general because I have these penalties in the contract and no one wants to pay them, or disrespect me by paying late or being late.

[playfelt]

I include late fees on the receipt. Parents will be claiming it on their taxes as money paid out for childcare so the safest thing is to have also claimed it as income. In the grand scheme of things it won't effect your bottom line tax wise enough to take the risk of not claiming it.

The only exception I had was when my own kids were in the 12 and up age range anytime a parent was late they paid my child directly in cash only for "babysitting" because they were the ones watching them in the playroom while I made supper. They did not get a receipt for it and income wise the kids didn't make enough to file. I had receipts to match the cheques I received. With a cash payment there is no record to either party of money paid or received. That is one reason why caregivers require cash in hand at pick up for late fees. Then it comes down to a moral question of job related or not.

[angelina]

in all legality, late fees are taxable.

however, i'm a bit of rouge here. my client is seldom late, so when she is, i ask her to get me something - if she is in coffee shop, bring me coffee; if in grocery, bring me bunch of bananas, or pretty much anything to make me feel better, "maybe bribe me to be nice to you " when you get here. That is also because we have a warm and friendly relationship, this is my year 2 with her, and we tend to get along great.

however, this maybe different for those with agencies. is it billed through the time sheet?

receipts issued are only the regular rates stated in the contract which is pretty much same every billing cycle.

angie