@Daboa wrote:
Thanks for the reply. Some clarifying questions:
- Does a W-10 replace a W-9 for dependent care providers?
- No W-10 was provided by my client's last care provider... is that going to be a problem for them on their taxes?
- Are quarterly installments only based on the 15% self-employment tax? Not based on estimated income tax?
1. Correct. W-10 is only used for day care providers.
2. That's their problem, isn't it? Normally, the taxpayer who wants to claim a credit for childcare expenses must provide the tax ID number of the care provider. There is a way to claim the credit without the provider's number, but it requires filing by mail (not e-filing) and is not guaranteed. And if the credit is awarded, the IRS will come after the provider to make sure they reported the income.
3. You will owe self-employment tax AND regular income tax on your net income from the business.
