Miscellaneous Topics

A. Retirement plans:

Even though you may not have a lot available to set aside for retirement, it is a good idea to set aside some amount each year toward your retirement. Providers find they are more successful in retirement savings if they commit to setting aside an amount each month rather than waiting until the end of the year. Low-income child care providers can also take advantage of an IRA tax credit in 2015. Families that earn less than $30,000 (single) or
$60,000 (married) are eligible for a 10-50% tax credit up to $2,000 for contributions to any IRA plan. This credit is in addition to any existing tax deductibility of IRA contributions!

Following is information about some retirement plans available to child care providers. Providers should check with their tax advisors to determine which plan is appropriate for their business.

  • Traditional IRA
    • Can set aside up to $5,500 per year ($6,500 if you are age 50 to 70 1/2)
    • 10% penalties if funds withdrawn before retirement (with certain exceptions)
    • Can set up by April 15 for the prior year
    • Must begin taking distributions no later than the year you reach age 70 1/2
  • Roth IRA
    • Can set aside up to $5,500 (non-deductible) per year ($6,500 if you are age 50 to 70 1/2)
    • Can withdraw contributions tax free after 5 years
    • Can withdraw interest tax free after age 59 ½
    • Minimum distribution rules at age 70 1/2 do not apply
    • Cannot contribute more than $5,500 per person, per year to a Roth IRA or regular IRA or non-deductible IRA combined
    • To contribute to a Roth you must earn less than $116,000 (unmarried) or $183,000 (married, filing jointly)
  • Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)
    • Can set aside up to $12,500 (deductible) of net income ($15,500 if you are age 50 or over),
    • Operates like a regular IRA
    • Must offer same plan to employees earning $5,000 in any of two preceding years
    • 25% penalty for early withdrawal in first two years
    • Cannot make contributions to a SIMPLE and SEP in same year
    • Must set up 90 days before end of year
    • No income level, everyone is eligible
  • Simplified Employee Pension (SEP)
    • Can set aside up to 25% of net income per year
    • Operates like a regular IRA
    • Must offer same plan to employees if employee is over 21 years old, has worked for you in 3 of past 5 years and has earned at least $450
    • Can set up by April 15 for the prior year
    • No income level, everyone is eligible

B. Registering your business name: If you use only your given name as your business name (e.g. Jane Doe) you do not need to register the name. However, if you use any other name for your business (e.g. Jane’s Child Care), you need to register the name with the Oregon Secretary of State. Registration is required to verify that you are not running your business under a name that is already registered by someone else. You register the name by filing a form “CR 101”, Assumed Business Name - New Registration. The form can be obtained by calling the Oregon Secretary of State’s office at 503-986-2200, or via their website www.filinginoregon.com. After you file the form, the State will conduct a search to confirm that the name is not already registered by another business. The fee to register business name in Oregon is $50.

C. Change of address: If you move during the year, you need to notify the IRS of your new address. This is done by filing Form 8822, "Change of Address".

  • If you neglect to do so, the IRS may send important notices to your old address. The Post Office may then fail to forward them to you or only forward them after a lengthy delay. In some cases, the consequences can be costly.
  • For example, if IRS is sending you a notice of a tax deficiency, it will send it to your old address and you may never receive it. After 90 days, you will lose the right to contest the matter in the Tax Court. (You can still wage the battle in Federal district court, but you will have to pay the tax first, and there may be other tactical disadvantages.) Also, of course, if you do owe tax and are delayed in learning about it, the penalties and interest costs will increase.
  • In order to meet its responsibilities in many cases, the IRS does not actually have to find you to give notice. All it has to do is send a notice to your “last known address.” This is the case when it sends out a “notice and demand” for tax, a notice of intent to levy, a notice of seizure and sale of your property, and notices of tax deficiencies. Your defense of “I never got notice” is lost if IRS properly sent the notice to your old address.
  • Once you file a tax return showing your new address, IRS will make the change itself but only after the return is processed (generally on July 16 for a return filed before June 1). To be safe, you should notify IRS of the change directly.

D. Medical insurance premiums for self-employed: You can deduct 100% of the amounts paid for health insurance for yourself, your spouse and your dependent in computing your adjusted gross income.

  • No deduction is allowed for any month you or your spouse were eligible to participate in any subsidized health plan of your or your spouse’s employer.
  • No deduction is allowed in excess of your business net profits.

E. Software Programs: There are numerous software packages available to assist providers in tracking their child-care activities. Some questions that you will want to ask before purchasing any software are:

  • Will the software work on my computer? Is there enough memory on the hard drive, etc.?
  • Is there a demo package or trial package that you can try before purchasing the software?
  • What kind of technical support does the company offer and how much will the technical support cost?
  • Are there current users of the software that I can contact before I purchase the package?

Software solution packages we have seen that are specifically targeted to child-care business are the following:

  • Minute Menu Kids (formerly C-K Kids) - This is an on-line software package originally designed by Red Leaf Institute; free 30 day trial; cost of software $69.95; annual renewal fee $39.95 www.minutemenu.com/cksignup
  • Maggey Deluxe Child Care & Day Care Management Software - The cost of this package ranges from $99.00 to $650.00. The software has add-on packages for various needs. For more information call 1-800-462-4439 or check the website at www.maggey.com.

The software available has a wide range of features, and a large range of prices. Before purchasing software, you need to determine which features you would actually utilize in your business.

F. Useful Websites:

  • IRS – www.irs.gov (1-800-829-3676)
    • Federal tax forms with instructions
    • Publications
  • USDA – www.fns.usda.gov/cnd/care/ (503-378-3600, Ext. 2611)
    • USDA Food Program Basics
    • Regulations and Policies of the USDA Food Program
    • Contact information to obtain more information
  • Northwest Nutrition Service – www.nwnutritionservice.com (503-653-7626 or 1-800-600-6058)
    • Northwest Nutrition Service is a non-profit organization established to administer the Child and Adult Care Food Program in Oregon.
    • Eligibility, training, newsletter
    • Contact information to obtain more information
  • Redleaf Institute – www.resourcesforchildcaring.org (651-641-6675)
    • Listing of products available to purchase to use in childcare business, such as Calendar Keeper, Tax Workbooks, software and other materials
    • Library of childcare reference materials
    • Tax Preparer Directory
    • Newsletter for childcare providers
  • Kidsource – www.kidsource.com
    • Video & book reviews
    • Helpful tips on various childcare topics
    • Recall notices
    • Newsletter
  • Oregon child Care Resource and Referral network (OCCRRN) - http://www.oregon.gov/dhs/children/pages/childcare/referral.aspx
    • Link with local Child Care Resource & Referral network
    • Training and education
    • Information on child care regulations and current subsidy reimbursement rates

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