Holding deposits

[Ottawaroses]

I have a family interested in care for Jan. 2016. They have to pay a holding fee to be applied against care when it is started. If I receive money in 2015 but care is in 2016 when do you give the family a receipt for income tax purposes? I have always had care start in the same year I received the deposit.

[Wonderwiper]

In my opinion....you said that the holding fee is applied to their regular fees so technically you are not "using" that money until they actually start care so I would issue them a receipt next year.

[Crayola kiddies]

I disagree ... All money you receive in 2015 goes on your 2015 taxes and therefore you issue a receipt for that money .... It doesn't matter when you use the money

[Lee-Bee]

There were pretty clear rules on this when I took the daycare tax class at the CCPRN. That said I can't for the life of me remember what the rules were!

I do know it wasn't just a matter of opinion it was firmly laid out when to give the tax receipt. I am sure some ladies on here will know for sure.

[5 Little Monkeys]

I apply the deposit towards end of care (so who knows when that will be) but I've always wrote it on their first year end receipt. I think there was a thread on here before where that was explained that it's the wrong way. Because it is for care at a later date, it is to be claimed in the year it us used.

[Wonderwiper]

I meant what 5 little monkeys said ha ha! I also use deposit for last days of care but claim the deposit as income when they start.

[5 Little Monkeys]

I meant what 5 little monkeys said ha ha! I also use deposit for last days of care but claim the deposit as income when they start.

Will you be changing the way you do it this year? I have a new one (well old one lol, coming back from a mat leave but only one day a week) starting next week and wondering if I shouldn't include the deposit on their year end this year like I normally would have done.

[Wonderwiper]

I will continue on as usual...have not had a new client in 3 years so a bit rusty on that part ha ha!

I don't have a holding fee but take 2 week deposit. It has always been paid to me when they fill out contract. I consider it income from the day they start care....even though I am technically saving it for their last 2 weeks of care. I guess I don't really consider it as "mine" before they actually start care so I would not claim a deposit given to me in 2015 for a client not starting until 2016 because something may happen where I return the deposit before they start. I have never been in this situation and my contract says deposit is non refundable but I'm sure things change sometimes.

Not sure what your situation is? You are getting a new deposit for child coming back 1 day per week?

[5 Little Monkeys]

I only introduced the deposit about a year or more ago. When they first started with me, it was 2 years ago. He stayed a year than went on a year mat leave with mom. They didn't pay to hold their spot so when they left it was like a normal withdrawal of care. They put him in preschool 4x a week but needed care for Mondays still. I have one pt child left so it worked out well. My deposit is one weeks of care so they're only paying a deposit of one day lol.

[mickyc]

I would write the receipt in the year you received it. That is what my accountant told me to do. My last pay of the year is on dec 24th, it covers the last week of dec and the first week of jan- I claim it in this year as I received it this year (and cashed it this year).

In all honesty I don't think it really matters. You claim your income and it all works out in the end. It's not like that one deposit is going to change your income by a significant amount.