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Family Child Care Associations Face IRS Filing Requirements |
IRS rules require all family child care organizations to file an annual information return (Form 990 or Form 990N) with the IRS starting. This rule affects all family child care associations who collect revenue, whether or not they have a tax-exempt status. It affects an association even if the association is not required to pay taxes on its revenue.
Any family child care association that has gross receipts (dues, training or conference fees, sale of items, etc.) of less than $25,000 must file Form 990N. Associations with gross receipts of more than $25,000 must file Form 990. These forms are informational, meaning that associations will not owe any federal taxes on their income. Under the old rule associations with gross receipts of less than $25,000 did not have to file any informational form.
The Form 990N must be filed electronically and the deadline for filing is May 15th for the previous tax year. The form itself asks for the following information:
Organization’s name
Any other names your organization uses
Organization’s mailing address
Organization’s website address (if applicable)
Organization’s employer identification number (EIN)
Name and address of a principal officer of your organization
Organization’s annual tax period
A statement that your organization’s annual gross receipts are still normally $25,000 or less, and
If applicable, indicate if your organization is going out of business.
If your association has obtained their tax-exempt status but fails to file the Form 990 or 990N as required for three consecutive years the IRS will revoke your tax-exempt status.
Unincorporated Associations
Many family child care associations operate without applying for a tax-exempt status from their state. This is perfectly legal. Usually a group of providers get together and call themselves an association without filing any forms with their state. Such associations are known as unincorporated associations. They may collect dues and keep a small amount of money in a checking account. In the past there were no IRS filing requirements. This new rule now requires even the smallest of family child care associations who has any amount of revenue to file a Form 990N. If your association does not collect any other revenue you are not required to file Form 990N.
This handout was produced by Think Small (www.thinksmall.org).
For Tom’s entire publications visit: NAFCC Store (NAFCC members receive a discount)
Tom Copeland This email address is being protected from spambots. You need JavaScript enabled to view it. Phone: 801-886-2322 (ex 321)
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"Become a member of the National Association for Family Child Care, (http://www.nafcc.org/) and receive monthly business e-newsletters, discounts on books by Tom Copeland, IRS audit help, and much more."
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Stipends to Family Child Care Association |
An increasing number of family child care associations are reimbursing their board members and officers for the costs of attending association meetings. What are the tax consequences of such payments?
Expenses of association officers or board members, paid by the association to reimburse the costs of attending association meetings are not taxable income to the member. Such out-of-pocket expenses may include:
Mileage payment (50 cents per mile is the 2010 federal standard mileage rate)
Bridge, ferry or road tolls
Parking expenses
Payments to a substitute so the provider can attend the meeting
The association should approve a written policy about payments of such expenses and include their policy with the official records of the association. The association should require the board member or officer to submit receipts or other records showing that such expenses were incurred. Such payments should not be shown as income on the individual’s tax return. The individual should keep a copy of their receipts or records as well as records showing that the source of the payments was the association.
Direct payments by an association to a board member or officer to attend an association meeting are taxable income. An example would be if an association paid a stipend of $25 for its board members to attend board meetings. If an association paid a $25 stipend to board members and said that such payment could be applied to members’ parking and other expenses, such stipends would also be taxable because they were not reimbursements for specific expenses. Such stipends should be reported on the individual’s Schedule C as Other Income. The association must issue a Form 1099 Miscellaneous at the end of each year for each person it paid more than $600 in stipends.
The above rules apply in the same way whether the association is unincorporated or is a non-profit corporation.
This handout was produced by Think Small (www.thinksmall.org).
For Tom’s entire publications visit: NAFCC Store (NAFCC members receive a discount)
Tom Copeland This email address is being protected from spambots. You need JavaScript enabled to view it. Phone: 801-886-2322 (ex 321)
Facebook - http://www.facebook.com/tomcopelandblog
Blog - http://www.tomcopelandblog.com
"Become a member of the National Association for Family Child Care, (http://www.nafcc.org/) and receive monthly business e-newsletters, discounts on books by Tom Copeland, IRS audit help, and much more."
