In the world of taxes, there are Social Security numbers (SSN), Employer Identification numbers (EIN), Taxpayer Identification numbers (TIN) and Preparer Identification numbers (PTIN) but no daycare identification numbers. Maybe there should be.
Currently, daycare provides must give parents either their SSN or EIN so that the parents can claim the Child and Dependent Care Credit on their returns. But identity theft is a big problem and daycare providers are becoming concerned about giving out their SSN.
Most individuals providing daycare don’t qualify for an EIN. They file as a sole proprietor on a Schedule C and they don’t have employees that would require them having an EIN. So they use their SSN. Their worry is not just the parents to whom they give their SSN but anyone who has access to the parent’s return. The number is printed on the Form 2441 for anyone to see.
It may be time for the IRS to create a special number for daycare providers who don’t qualify for an EIN. After all, they did that years ago for tax preparers when they created the PTIN. If creating a special number set for daycare isn’t an option, perhaps they can work with Social Security to allow these taxpayers to get an EIN strictly to give to parents.
I have heard from Frank, Paul and several others suggesting that daycare providers get an EIN. They are easy to get online on the IRS web site. When asked why you want an EIN, most suggest using the "bank account" option. Paul also suggested using the "other " line and adding identity theft. I still think the IRS needs to seem less like cheating by including a "daycare option."