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  1. #1
    Euphoric ! Sandbox Sally's Avatar
    Join Date
    May 2011
    292 Times in 225 Posts

    Taxes and Security Deposits

    Hi guys! Boy do I love tax time (insert sarcastic emoticon here).

    This is my first year filing as a daycare provider, and I am wondering about security deposits. I use security deposits for the last two weeks the children are in my care, and so far, they're all still in my care.

    Should I include the deposits as income for this year, or should I include it for the tax year for which I use it?

    ALSO: Any other helpful tax prep hints you could throw my way would be very greatly appreciated.

  2. #2
    Starting to feel at home...
    Join Date
    Jan 2012
    56 Times in 43 Posts
    I second this question! I'm wondering the exact same thing.

  3. #3
    Join Date
    Feb 2012
    1 Time in 1 Post
    Its applied to the tax receipt for the year it is used. Like rent would be. So if it was to hold the space and will not be applied to future fees. Then it would be put down as payment on your tax receipt for 2011. However if it will be used to cover the child's last week in care then it would go on that years receipt. At least that's how I do it. Its saves everyone from accidentally claiming more then once.

  4. #4
    Euphoric !
    Join Date
    Feb 2011
    Ottawa, Ontario
    1,469 Times in 1,125 Posts
    I always thought it had to be claimed in the year received since you banked it and presumably had it spend as income. Then in the year they leave you will just not claim income for the two weeks they come but don't pay.

  5. #5
    Euphoric ! Inspired by Reggio's Avatar
    Join Date
    Nov 2011
    946 Times in 686 Posts
    I think whatever works for YOU as long as you DO eventually claim it and give them a receipt for it is fine - it is not like we are talking enough to make a huge difference in tax owed here like with a Real Estate deposit

    I personally do NOT spend the Security Deposit - it gets deposited it into my 'savings account' and keep it there for when they leave and if they give me LOTS of notice they are leaving I try to budget for that dip in income and than can leave it in my savings however if I get only two weeks notice and am not prepared and I 'need' the income I transfer it out - it is a forced savings for me to have that rainy day fund this business requires - plus to save for the tax bill and other things that might come up

    Book keeping wise - it sits there in their account as a 'credit' and when proper notice is given it is applied to their last two weeks of care than I remove the credit and apply to their account and therefore it will show up in their 'annual receipt' for that tax year it was applied.
    Children construct their own intelligence. The adult must provide activities and context, but most of all must be able to listen. Children need proof that adults believe in them. Their three great desires are to be listened to, to understand, and to demonstrate that they are exactly what we expect."
    Loris Malaguzzi

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