Are you liable when a child is injured in your care?

Are You Liable When a Child is Injured in Your Care?

By Tom Copeland. Published with permission.

This week a family child care provider wrote me:

"A five year old came to my home from preschool and snuck in pea gravel from the school playground. He and a four year old girl wereplaying and he convinced her to put a pebble in her ear. She came to me crying and when I couldn't get it out I called her mother.

They went to the emergency room and the on-call doctor pushed it infurther while trying to take it out. They went to a specialist the nextday where the child ended up in surgery.

The family has a high deductible medical insurance policy. They don't want to pay the large medical bill and asked me to pay some of thecost.

Am I liable?"

The short answer is yes. Since you are the responsible adult whilechildren are in your care, in general, you are liable for any injurysuffered by a child.

Your homeowners insurance policy is unlikely to cover you in thissituation. If you have business liability insurance you will probably be covered for medical expenses up to around $10,000.

If you don't have business liability insurance, you should tell theparent you don't have insurance. This may discourage them from trying tosue you. You could offer to pay some of the medical bill in the hopethat this will end the matter. However, if the child later sufferscomplications, the parents could decide to sue you later. If they do, you are likely to lose.

With more and more families forced to purchase health insurancepolicies with high deductibles, this scenario is likely to occur more often. Your only protection is to purchase adequate business liabilityinsurance. See my article, "The Real Risks in Family Child Care."

Whenever there is an injury to a child in your program, take the following steps:

1) Report it immediately to your child care licensor

2) Report it immediately to your business liability insurance agent

3) Keep a careful written log of all events surrounding the incident

www.tomcopelandblog.com

IRS Tax Forms/Publications

 

IRS Tax Forms/Publications and 2010 Tax Changes

Here are the most common IRS tax forms and publications that you may need to prepare your tax return.

Form 8829 Expenses for Business Use of Your Home - Use this form to calculate your Time-Space percentage and claim house expenses: property tax, mortgage interest, house repairs, utilities, house insurance, and house depreciation. The 2010 version was released by the IRS on February 7, 2010.

Instructions for Form 8829 Expenses for Business Use of Your Home - This form contains an explanation of how to report your time-space percentage on Form 8829 when you have an exclusive use room. See page 2.

Form 4562 Depreciation and Amortization - Use this form to claim depreciation on office equipment (computers, printers, etc.), furniture, appliances, fence, patio, and home improvements

Form 1040 Schedule C Profit or Loss from Business - Use this form to report your income and your business expenses. The expenses from Form 8829 and Form 4562 are transferred to this form.

Form 1040 Schedule SE Self-Employment Tax - Use this form to calculate your social security/medicare taxes on the profit of your Schedule C. Transfer this tax amount to your Form 1040.

Form 1040 ES Estimated Tax for Individuals - Use these quarterly forms to pay estimated taxes on April 18. 2011, June 15, 2011, September 15, 2011, and January 16, 2012.

Form 3115 Application for Change in Accounting Method - Use this form to recapture any depreciation you were entitled to claim from earlier years but didn't claim. There is no limit for how far back you can go to recapture this depreciation. My book Family Child Care Tax Workbook and Organizer has a chapter explaining how to fill out this form.

Form W-10 Dependent Care Provider's Identification and Certification - Use this form to give parents your identification number. You can write the amount the parent paid you on the top of the form and use it as an end-of-year receipt. Get the parent to sign a copy and keep for your records.

Form 1040 X Amended U.S. Individual Tax Return - Use this form to amend your tax return up to three years after filing your original return.

IRS Publication 583 Starting a Business and Keeping Records - This publication outlines what records to keep to claim them as business expenses.

IRS Publication 587 Business Use of Your Home - This publication explains how to calculate your time-space percentage and claim food expenses.

How to make the most of land improvements

How to Make the Most of Land Improvements

By Tom Copeland. Published with permission.

What do the following items have in common: outdoor fence, patio, driveway, sidewalk/walkway, underground sprinkler system, cement slab, sewer line, septic tank, underground swimming pool, and a well?
 

They are all considered land improvements that you can deduct as a business expense.
 

A land improvement is something that is attached to your land, costs more than $100, increases the value of the land and has a separate useful life apart from the land.
 

You must depreciate land improvements over 15 years. If you use the item 100% for your business you can depreciate 100% of the cost. If it's used for both business and personal purposes, multiply the cost by your Time-Space Percentage before depreciating. If your actual business use percent is much greater than your Time-Space Percentage, you can use the actual business use percent before depreciating it. See my article on how to calculate an actual business use percent.
 

If you install a land improvement in 2012 and purchased the item new, you can use the 50% bonus depreciation rule that allows you to claim expenses faster than using the regular 15 year rule.
 

Let's say you had a new patio installed in June 2012 for $2,000. Your Time-Space Percentage is 40%. Here's how you would claim this expense on your tax return:

$2,000 x 40% = $800
 

Using the 50% bonus rule you get to deduct 50% of the $800 in 2012 = $400

You must depreciate the remaining amount ($400) over 15 years: $400 x 5% (1st year using the declining balance method) = $20
 

Total amount claimed in 2012: $420
 

So, save the receipts for all expenses associated with land improvements (contractor fees, supplies, tools, sales tax, delivery costs, etc.).

 

Note: if you bought patio furniture that you used in your business, this is personal property that can be depreciated over 7 years and is also eligble for the 50% bonus rule.
 

Note on Landscaping
 

Landscaping (trees, shrubbery, sod, plantings, grading and landscaping fees) is not considered a land improvement. If you spend less than $100 on these items, deduct the business portion in one year. If you spend more than $100 and they are put immediately adjacent to your home, depreciate them over 39 years. If they are installed away from your home you cannot deduct them.
 

Image credit: dreamstime.com

For further information about how to depreciate land improvements, see my Family Child Care Tax Workbook and Organizer.

Posted by Tom Copeland at 09:26 PM in Record Keeping & Taxes | Permalink

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The cost of dogs bites

The Cost of Dog Bites

By Tom Copeland. Published with permission

Who pays when a dog bites a child in your family child care home?

Your homeowners insurance policy will not pay because it excludes coverage for accidents arising out of your business.

Your business liability insurance policy typically excludes coverage for dog bites. You may be able to get dog bite coverage for an additional fee or for specific breeds of dogs. 

Therefore, since the incident happened in your home, you will probably be held responsible. Some states have laws that make dog owners automatically liable for any injury caused by a dog, even without provocation. Other states will hold the dog owner liable if the injury occurred because the owner was unreasonably careless in controlling the dog. In a few states the dog owner will only be held liable after the second bite ("vicious dog"). 

What can a dog bite cost you?

The average cost of a dog bite paid out by homeowners insurance policies in 2011 was $29,396 (up 12.3% from 2010). The average cost of dog bite claims has increased by over 53% between 2003 and 2011, according to the Insurance Information Institute.

If a parent sues you after a dog bites her child, you can expect to pay thousands of dollars in legal fees and medical expenses. Your homeowners insurance policy won't help you and your business liability insurance may not, unless you have it specifically included in your coverage.

Therefore, it's vital that you keep all dogs away from day care children. I have spoken with providers who tell me that their dog mingles with day care children and would never hurt a child. Maybe. But, if you do this you are taking on a big financial risk. If it happens once, the cost of a single dog bite can be huge.

Thanks to Liz Downs of New England Insurance Services.

Image credit: elitelawyerproject.com

Posted by Tom Copeland at 12:22 PM in Legal & Insurance | Permalink
 
www.tomcopelandblog.com

Tax deductibles spring of clean

Weekly Business Tip: Spring Cleaning

By Tom Copeland. Published with permission.

With warm weather spreading across the country, spring cleaning time is here.

As a family child care provider, you want to take advantage of the many business deductions associated with indoor and outdoor cleaning.

Costs associated with the cleaning and maintaining of outdoor space where children play are probably at least partly deductible as a business expense. These can include: lawn mower, gas for the lawn mower, garden rake and hose, hoe, shovel, garbage bags, mulch, plants, tree, tree removal, wheel barrow, and so on.

Indoor cleaning costs can include: window cleaner, paper towels, floor polish, wet/dry mop, broom, vacuum cleaner, shop vac, sponges, disinfectant, steam cleaner, pail or bucket, air fresheners, and so on.

You can also deduct the cost of hiring someone to do your indoor cleaning or mowing your lawn. If you hire a self-employed person (rather than a company) you must file IRS  Form 1099 Misc. if you pay any one person $600 or more.

Unless you are spending money to clean exclusive business use rooms, use your Time-Space Percentage to determine the business portion of these costs you can deduct.

www.tomcopelandblog.tom

Marketing tools

New Marketing Tools Available from First Children's Finance

By Tom Copeland. Published with permission.

Why should parents bring their child to your family child care program?
Your ability to answer this question will determine in large part how successful you will be. Maybe you run a high quality program, but unless parents know about you, you may struggle to succeed.
First Children's Finance, a non-profit agency in Minneapolis, Minnesota has posted a number of marketing tools on its website that you can download to help you promote your program. They include:
* Promoting the Benefits of Your Child Care Program: a worksheet to help you identify the benefits of your program.
* Marketing Assessment Checklist: a checklist that identifies over 30 marketing tactics to help direct your marketing efforts.
* Who Are My Toughest Competitors?: a worksheet to help you compare your program.
The First Children's Finance website also contains a number of additional marketing resources. Their Business Resource Center for Family Providers offers tools and resources on Recordkeeping and Taxes, Contracts & Policies, Legal & Insurance, Money Management, and How to Start. I wrote a number of these tools and resources.

FCF is a non-profit organization providing financial and business-development assistance to high-quality child care businesses (homes and centers) sering low-and moderate-income families. They offer low-interest child care loans and business consulting services in Minnesota, Iowa, Michigan, and North and South Dakota. For further information about their loan program, call 612-279-6515.
For many years I served on the board of FCF.
Image credit: www.firstchildrensfinance.org
For more information about marketing, see my book Family Child Care Marketing Guide.

www.tomcopelandblog.com

Mandated reporter training

You can take the computer in English, but DCFS accepts only if you speak enough English to understand. Now the training is also available in Spanish. You must register to get started, take a test of prior knowledge, take the training, retake the test to see if the DHS training is effective, and print your certificate. You must print the certificate upon completion of training, or you will have to take it again.
To take the online training en English go to

https://www.dcfstraining.org/manrep/index.jsp

 To take the online training en Spanish go to
https://mr.dcfstraining.org/UserAuth/Login!loginPage.action?request_locale=es