When do you add your deposit as an income ??

[suzydominguez]

Hello everyone,

2014, was the first year that I actually started charging new enrollments with a one week deposit. This deposit is than used for the child's last week, before termination. This week I am preparing my childcare receipt, for my parents and am not sure if I should include these deposits on my 2014 income, or add it to my income the year that the child has terminated. Anyone can help me with this ?

Thank you :)

[5 Little Monkeys]

I added mine to 2014's income. When the time comes for them to leave, they owe 3 out of 4 weeks of their last months payment.

[bright sparks]

I include it in the tax year that it was applied so basically the year they leave is the year it goes down as income.

[Crayola kiddies]

Actually your supposed to include it in the year it was received

[babydom]

I apply it to the yr it is used. When they leave.

[bright sparks]

Actually your supposed to include it in the year it was received

Well that may be so, but I don't do it that way as I hold the money until it's used in exchange for services. Makes my book keeping easier for me. I also spoke to a number of providers who all do it this way too.

[mickyc]

This is why I apply it to their first 2 weeks of care not the last.

That being said it is to be applied to the year you received it in. It's the same as when you receive funds the last week of December for the first 2 weeks of January. Money was paid in 2014 for jan 2015 fees but must be claimed in 2014 as that is when money was paid.

[Busy ECE mommy]

I claim it in the year the cheque was received, as mine are dated for the current date, and deposited at that time.

[playfelt]

You are supposed to claim all money in the year it is paid. I don't receipt the money to the family until I give them their receipt for their first week of care - ie if they don't end up starting there is no record of the money so to speak and my bonus. It means they are really paid up two weeks in advance so if they suddenly leave without notice I am paid for two more weeks.

[Suzie_Homemaker]

No. Look at self emplyed rules - you claim it when you earn it so if it's last week of care then you add deposit in last week. But you give receipt for deposit and they can claim when given. Just you claim when earned.

[5 Little Monkeys]

I receive the cash/cheque before the child starts. I cash it than (most parents usually pay the first 2 weeks plus the deposit at the same time so it's only one cheque in most cases) I am correct in claiming it for that year right, not when the child leaves? I can't imagine hanging on to a cheque for up to 4 years anyways? That seems odd. Parents could cancel that account in that time and forget all about that cheque (probably unlikely but could happen?? lol)

This is also my first year in charging a deposit (I might have done it a bit the year prior, I can't remember when I introduced my deposit fee) so I never really gave it much thought in regard to when I should claim it.

[Suzie_Homemaker]

Don't hang on to the cheque. You cash the cheque. But the receipt for first year will just include the part that is first 2 weeks pay. If your deposit comes off last week of care, then that part of the cheque you declare as income in the final year.

You take the cash/cash the cheque but don't have to declare it until it's earned.

I will try and find the CRA self-employed rules. I will ask my book lady if I can;t find it

EDIT - I found it. T4002 Business and Professional Income 2014 http://www.cra-arc.gc.ca/E/pub/tg/t4002/t4002-e.html#P132_4667


Accrual method

In most cases, self-employed individuals report their business income using the accrual method of accounting. With this method, you:

report your income in the fiscal period you earn it, regardless of when you receive the income; and
deduct expenses in the fiscal period you incur them, whether you paid them in that period or not. Incur usually means you either paid or will have to pay the expense.
Income from professional activities is business income. Therefore, you report it using the accrual method.