No. Sometimes providers help parents who are suffering a family emergency by donating free child care. Or, a provider might give parents a scholarship, discount or otherwise offer free care.
In all of these situations, the provider cannot claim unpaid care as a business deduction. This is because parents are not a tax deductible charity. So, money you don’t collect is not a deduction. It means you have less income to report at the end of the year, and therefore lower taxes.
However, don’t let the tax consequences get in the way of helping parents!
Categories: Ask Tom