Section B Taking Care of Business
By any definition, including that of such government entities as the Oklahoma Department of Human Services (DHS), the Internal Revenue Service (IRS), and the Oklahoma Tax Commission (OTC), child care is a business like any other. As a result, all of your billing records, documentation, and DHS records should be kept in an organized, easily accessible, business-like manner. You must maintain accurate business records in order to be paid correctly. If you fail to keep accurate records, you may lose profits due to overpayments that must be paid back to DHS.
Important Tax Information
Each January, the EBT contractor will send a copy of Form 1099 (when required by law) to the IRS and to you.
It is very important that DHS has your business’s current and correct name and Tax Identification Number (TIN). Your TIN is your Social Security Number (SSN) or Employer Identification Number (EIN). Any updates to your TIN should be immediately reported to your licensing specialist.
You must provide your taxpayer identification number to each parent or guardian so that they may claim Child and Dependent Care Credit on their tax returns. You can use the Internal Revenue Service (IRS) Form W-10, Dependent Care Provider’s Identification and Certification, to supply this information to your parents.
Form W-10 states that if you, as the provider, fail to give your taxpayer identification number to your parents, you can be subject to a penalty of $50 for each failure unless the failure is due to reasonable cause and not willful neglect. This form is available on the IRS web site at www.irs.gov.
Whether you use this form or not, Information that you need to provide to each parent or guardian includes:
- Your name;
- Your address; and
- Your taxpayer identification number (TIN).
Earned Income Tax Credit, Child Tax Credit, Child and Dependent Care Credit
You, your employees and the families you serve may be eligible for a tax refund or a tax credit. You may be able to lower your taxes or increase your tax refund by claiming the Earned Income Tax Credit, the Child Tax Credit and the Child or Dependent Care Credit.
The Earned Income Tax Credit (EITC) is designed to provide a wage supplement for low-income working families. For families who owe federal income tax it can reduce or eliminate the tax they owe and they may even get a refund. In general, families with lower income and larger family sizes receive a larger credit.
The Child Tax Credit (CTC) is a federal tax benefit for each dependent child under 17. Even families that earned too little to owe income tax can get the credit. This credit is in addition to any Earned Income Tax Credit for which the family qualifies.
The Child and Dependent Care Credit is a tax benefit that helps families pay for child care in order to work. Working families of all income levels are eligible for the Child and Dependent Care Credit. The higher the family’s child care expenses and the lower the amount of income, the larger the family’s credit. Families may qualify for the Child and Dependent Care Credit if they have child care expenses for any children under age 13 who live with them who they claim as dependents. DHS clients who pay co-payments should claim this credit.
We encourage you to post the tax credit flyers that will be made available to you each year by DHS in your child care facility. For more information about how you can receive the tax credits or to find out how you can get your tax forms filled out for free, call 1-800-829-1040. You can also visit the IRS web site on the Internet at www.irs.gov where you can get tax information and download tax forms.
Business Tax Workshops
Business tax workshops are offered by the Oklahoma Tax Commission. These workshops are free of charge and are designed to meet the needs of all business ownership from new business to existing business. The OTC web site is www.tax.ok.gov.