How to Claim Food Expenses

6a0133f3fc5805970b0147e1e68970970b-320wiThe biggest single expense for many family child care providers is food. Therefore, you want to make sure you claim this deduction accurately.

You have two choices in how to claim food expenses:

The Standard Meal Allowance Rule

This rule allows you to claim food expenses without saving any food receipts! I lobbied the IRS to adopt this rule in 2003 (IRS Revenue Ruling 2003-22) because I saw how difficult it was for child care providers to save receipts for all business and personal food and try to sort out which was which.

To use this method add up all the breakfasts, lunches, suppers, and snacks you serve to the children in your care and multiply by the standard meal allowance rate for 2016: $1.32 breakfast, $2.48 lunch/supper, $.74 snack. You can deduct up to one breakfast, one lunch, one supper, and three snacks per day per child (if you serve that many!). Some providers get confused about this because the Food Program will only reimburse up to three servings per day per child. See my “Deduct 6 Meals?” blog post.

All child care providers can use the standard meal allowance rule to claim food expenses whether or not they are on the Food Program, and whether or not they are operating legally.

If you use this rule the main issue is to keep the following records: name of each child, dates and hours of attendance in care, and the number of breakfasts, lunches, suppers, and snacks you served. If you are on the Food Program keep your monthly claim form which contains this information.

What’s most important, however, is to keep a daily record of all meals and snacks that are not reimbursed by the Food Program. You don’t need to keep a menu. These non-reimbursed meals and snacks do not have to be nutritious. If you serve a popsicle in the afternoon, it’s a snack! I’m not advocating that you serve junk food, but if you do, it’s deductible. Do your best to record these non-reimbursable meals and snacks because it adds up: One non-reimbursed snack a day is worth $185 a year per child!

Actual Food Cost Method

If you use this method you must save receipts for all your business and personal food. Saving all personal food receipts can be a chore. You must do this, however, so that the IRS will believe that your business food receipts are for your business.

Then you can use several different ways to estimate the actual cost of the food served to the children in your program. You could buy food separately, calculate your own average cost per meal, or deduct a percentage of the total cost of your food. My book Family Child Care Record Keeping Guide lists six ways to determine your food costs using this method. In addition to all your food receipts, you must also keep the same records described above when using the standard meal allowance rule.

Because of the extra work required by this method, most child care providers use the standard meal allowance rule.

Note: Any food eaten by you or your own children at home is not deductible no matter which method you use to deduct food expenses.

Claim your food expenses on Schedule C as “Other Expenses” on line 27. See my previous blog post Are CACFP Reimbursements Taxable Income?”

Tom Copeland – www.tomcopelandblog.com

Photo credit: businesshandler.com

6a0133f3fc5805970b01bb08151dd5970d-320wiFor more information, see my book Family Child Care Record Keeping Guide.

 

 

 

Copyright 2011, Tom Copeland, www.tomcopelandblog.com



Categories: Food Program and Food Expenses, Record Keeping & Taxes

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15 replies

  1. I sat down and figured out my avg cost per meal, using 4-5 different meal options for snacks, breakfast and lunch/dinner. It totaled out to be a little higher than the standard amount. How do you record this in Minute Menu? I know you can record the receipts, but if you’re just using these average costs per meal for deductions, where does it go? Also, do I claim the difference between my average cost and what the food program reimbursed me? Thanks again!

  2. Yes, record your food receipts into Minute Menu. Then you must do your own calculation to come up with your food deduction. Enter you food expenses on Schedule C under Other Expenses on the back of the form. Don’t claim the difference between your average cost and the food program reimbursement. Instead, report your food program reimbursement as income and report all your food expenses as a deduction.

  3. From my understanding we cannot claim our children for the standard food deduction. Does this include nephew that lived with me temporarily?

  4. If you are being paid to care for your nephew you can count the meals he eats during the time other daycare children are present. If you are not paid, then don’t count his meals.

  5. Hi Tom, Can a provider who is using a corporate business entity still use the standard meal allowance to calculate food costs, or is there a better way?

  6. It doesn’t matter how your business is structured (self employed, corporation, partnerships) to be able to use the standard meal allowance rate.

  7. Do you claim Standard Meal Allowance rate under schedule c other expenses or is this only for actual food expenses?

  8. Claim food expenses on Schedule C under Other Expenses if you use either the standard meal allowance rate or the actual food expenses method.

  9. No matter which method you use, always put your food expenses on Schedule C, Other Expenses.

  10. Claim food expenses on Schedule C under Other Expenses with either method.

  11. If the standard deduction and reimbursement is the same, wouldn’t it just be a wash? Unless you use actual expenses or claim more meals than CACFP allows for reimbursement, the number would always be zero. If it is zero, why does it have to be tracked? It doesn’t make sense unless you are claiming you spend more than the reimbursements.

  12. If you use the standard meal allowance and let’s say you go on a field trip. Can I deduct over the cost of the standard meal rate if I paid more to go out to eat that day. Or is it like mileage and if I count miles, I can only claim miles driven and not gas and oil changes?

    • If you use the standard meal allowance rate you must use it for all meals and snacks served in the year. So, you couldn’t deduct the extra cost of food if you ate out on a field trip.

  13. Can a daycare CENTER not operated in a home and operating as a corporation use the meal allowance? And how do I balance this out when the amount is different than amount spent on food? What type of entry for books or Schedule L of balance sheet since the deduction may be more than the cash spent?

    • No. The standard meal allowance was written specifically for home based family child care providers. There is a Food Program reimbursement rate for child care centers that you could use instead. In general centers are spending more on food than they get from the Food Program. Report what you get from the food program as income and claim all the food you serve children as a food expense using food receipts.

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