Summer day camps qualify for Child Care Tax Credit per Pub 503 "even if they provide specialized activities, such as computers or soccer". Provider's CPA is saying their client does not have to provide EIN because it isn't an "all-day" camp. I never heard that one before. Before and after-school care qualifies and that is usually only a couple of hours max. Any comments?
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Unless the organization is a 501(c)(3), that CPA does not know what they are talking about.
Section 6109(a)(2) basically says that if somebody needs to enter your ID on their tax return, you need to give it to them.
Any person with respect to whom a return, statement, or other document is required under the authority of this title to be made by another person or whose identifying number is required to be shown on a return of another person shall furnish to such other person such identifying number as may be prescribed for securing his proper identification.
Section 21(e)(9) requires the ID number of the provider (exception for 501(c)(3) organizations, but no other exceptions), so that means that ?6109 requires them to provide the number.
Taxpayer should give the provide a W-10, and highlight the sentence in the Instructions that says "A care provider who doesn’t give you a correct TIN is subject to a penalty for each failure ... ".
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Along with what TaxGuyBill pointed out, why would the CPA care if the EIN is provided? Are they giving some reason why they would not want to provide it?
However, there is a solution even if the provider does not cooperate. Instructions for Form 2441 provide a "due diligence exception" (that's what I'm calling it) if you can't get the SSN/EIN. My software includes a pick list of due diligence codes including "Provider has refused to give me the TIN".
"You can show a serious and earnest effort (due diligence) to get the information by keeping in your records a Form W-10 completed by the care provider. Or you may keep one of the other sources of information listed in the instructions for Form W-10. If the provider doesn't give you the information, complete the entries you can on line 1. For example, enter the provider's name and address. Enter “See Attached Statement” in the columns for which you don't have the information. Then, attach a statement to your return explaining that the provider didn't give you the information you requested.""You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe HowardComment
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This is not a 501(c)3. It is a small, one-owner, for-profit corporation and has been since 1988, I found a State ID number registered for it on the state's website, but not a FEIN. I have already instructed client to send email or letter with W-10 attached and request number so they will have a record. I should have qualified my OP by stating taxpayer told me "her provider said that her CPA told her she didn't have to give it out, since it did not qualify for CCTC as it was not an all-day camp." I don't know if that is the case or not. But this was on the first inquiry, and that was the immediate response. Sounds like it has come up before. And that advice may have been related to another matter entirely.Comment
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I don't know if it still applies, but the last time I had a client with a provider who would not provide EIN/SSN, the tax return could not be efiled showing that provider on the Form 2441.Originally posted by Rapid Robert View Post
Choice was paper filing with a complete return, or efiling using only providers wiith full information.
Again, that was a few years ago. . .so things may have changed.Comment
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I made the mistake of focusing on the failure to provide EIN, rather than the actual question:
"Summer day camps qualify for Child Care Tax Credit per Pub 503 "even if they provide specialized activities, such as computers or soccer". Provider's CPA is saying their client does not have to provide EIN because it isn't an "all-day" camp."
In other words, does this type of dependent care actually qualify for the credit/exclusion? The care must be provided to allow the taxpayer/spouse to work. I'm a big fan of the IRS pubs, but maybe this one goes to the regs or court cases for determination?
It isn't really the provider's job to determine the answer to this question, but they seem to be taking it upon themselves."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe HowardComment
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Originally posted by Rapid Robert View Post
Not being all-day does not affect if it is work-related or not. A couple of common examples: (1) Taxpayer drops kid off and does Uber (or many other types of self employment) for a couple of hours. (2) Husband works 6am-2pm, Wife works 1:00pm-9pm (somebody needs to watch the kid for a couple of hours).
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Just to be clear, it sounds like TaxGuyBill, Burke, and I all agree that this would be a qualified day care expense. It is Burke's client's provider who is taking the position it is not qualified because it is not "all day".
The Form 2441 instructions do not use the term "all -day". I think they refer to "day camp" to distinguish from "overnight camp", not to mean "all day" (whatever that is).
"You can include amounts paid for items other than the care of your child (such as food and schooling) only if the items are incidental to the care of the child and can't be separated from the total cost. But don't include the cost of schooling for a child in kindergarten or above. You can include the cost of a day camp, even if it specializes in a particular activity, such as computers or soccer. But don't include any expenses for sending your child to an overnight camp, summer school, or a tutoring program."Last edited by Rapid Robert; 04-26-2022, 09:03 AM."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe HowardComment
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I think we all are in agreement that it should qualify. Further inquiries to this provider brought the same response, with the added fact that this information was from "...[her] CPA and she had been with him for 35 years!" (So, of course, he was right.) I'm going to the Tax Code and will be sending her a W-10 and a copy of the reg. BTW, I can e-file with the option "Provider refused to give TIN."Comment
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Things must have changed. The last time I had this scenario I did check the box "provider refused to give info" and everything was fine until I actually tried to efile that tax return. It was rejected for that reason alone, leaving client with scenario I mentioned above.Originally posted by Burke View Post
This was pre-COVID, so I do not know what happens to a similar 2021 efiled tax return.
It may also be worth noting the provider for my client was an individual (SSN required) and not a business (EIN).
Who knows. . .but it certainly was a nuisance at the time. The "bad" provider costs were not significant to the total (maximum) allowable costs for one qualifying individual, so the client chose to remove the problem provider costs and the return was then efiled without problem.
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