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Daycare and Taxes>Christmas Gift Card
Baby Beluga 11:05 AM 01-03-2017
I had a family gift me a Visa gift card equivalent to two weeks of tuition. I know I have to claim this gift on my taxes, but where do I claim it? Do I add it to the family's total tuition paid for year 2016?
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Cat Herder 11:08 AM 01-03-2017
"Other income"
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mommyneedsadayoff 12:12 PM 01-03-2017
Why would you have to claim it? Gifts are allowed up to a certain amount and I doubt your two weeks tuition is in the $13k to $14k range, so why would you count it as income?
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Baby Beluga 12:20 PM 01-03-2017
Originally Posted by mommyneedsadayoff:
Why would you have to claim it? Gifts are allowed up to a certain amount and I doubt your two weeks tuition is in the $13k to $14k range, so why would you count it as income?
It was my understanding that we had to claim cash or cash equivalent gifts regardless of the amount.

http://tomcopelandblog.com/giving-an...g-the-holidays
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Baby Beluga 12:22 PM 01-03-2017
Originally Posted by Cat Herder:
"Other income"
Thank you!
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mommyneedsadayoff 12:38 PM 01-03-2017
Thank you for the link! Im still a bit skeptical about that one, as there seems to be a grey area on gifts, especially those under a thousand.IF you claim it, i would buy some new toys, so you can deduct a little at least
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TomCopeland 02:29 PM 01-03-2017
Originally Posted by Baby Beluga:
I had a family gift me a Visa gift card equivalent to two weeks of tuition. I know I have to claim this gift on my taxes, but where do I claim it? Do I add it to the family's total tuition paid for year 2016?
This issue is a grey area. If the parent's gift was given in an expectation of getting something in return (ie child care) then it's taxable income. If it wasn't, then it's not income. However, I'm assuming the IRS would look at gift cards and cash from a parent as extra payment for services, rather than a gift. It would be up to the provider to show that this was a gift, and that might be hard to do. I would act conservatively and report it as income. If you use the money to buy something for your business you can deduct it using the normal rules of deductions.
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Baby Beluga 09:33 AM 01-04-2017
Originally Posted by TomCopeland:
This issue is a grey area. If the parent's gift was given in an expectation of getting something in return (ie child care) then it's taxable income. If it wasn't, then it's not income. However, I'm assuming the IRS would look at gift cards and cash from a parent as extra payment for services, rather than a gift. It would be up to the provider to show that this was a gift, and that might be hard to do. I would act conservatively and report it as income. If you use the money to buy something for your business you can deduct it using the normal rules of deductions.
Thanks Tom.

I send all parents an end of year tax receipt with their total tuition paid. I know it's not required but I choose to do it. With that being said, would I include the gift card in their total tuition paid amount or would I simply put it in an extra income category while filing my taxes?

For example: if the family pays $5000 in actual tuition costs and gifts me $400 in a gift card, would I write their receipt for $5000 or $5400?
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TomCopeland 10:02 AM 01-04-2017
Originally Posted by Baby Beluga:
Thanks Tom.

I send all parents an end of year tax receipt with their total tuition paid. I know it's not required but I choose to do it. With that being said, would I include the gift card in their total tuition paid amount or would I simply put it in an extra income category while filing my taxes?

For example: if the family pays $5000 in actual tuition costs and gifts me $400 in a gift card, would I write their receipt for $5000 or $5400?
I would not report the gift card in the parent receipt because it's not payment for child care services. So, give them a receipt for $5,000.
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