Claiming Meals/Snacks That Are Reimbursed by the Food Program
"A tax preparer is telling our family child care providers that they cannot deduct the cost of meals and snacks reimbursed to them by the Food Program."
I heard this shocking statement at the California Child and Adult Care Food Program Roundtable Conference in Los Angeles this week. In fact, I heard from several Food Program sponsors that tax preparers in their community were discouraging providers from joining the Food Program.
These tax preparers are making a huge mistake in thinking that providers will lose the ability to deduct some food expenses if they participate on the Food Program. Here's the truth: "The [standard meal allowance rates] apply regardless of whether a family child care provider is reimbursed for food costs, in whole or in part, under the CACFP, or under any other program, for a particular meal or snack." See IRS Rev. Pro.c 2003-22
The vast majority of family child care providers use the standard meal allowance rate to deduct their food expenses. They can deduct up to one breakfast, one lunch, one supper, and three snacks per day, per child. There is no requirement that any food receipts be saved. Providers simply need to track daily attendance and the number and type of meals and snacks served.
Here's another IRS authority on this point: "If the provider receives reimbursement for food costs through the CACFP ... or any other program, the provider can report all the reimbursements under the income section of Part I of the Schedule C and then deduct the food expenses in full, which is the recommended method...." See IRS Child Care Provider Audit Technique Guide
So, any tax preparer or Food Program sponsor who tells providers that they can't deduct the cost of food for meals and snacks for which they were reimbursed is dead wrong. The fact that this false information still is being passed on to providers is a great shame. It has lead to numerous providers deciding not to join the Food Program for fear that they will lose their food deductions and pay more in taxes.
I've written about this issue elsewhere:
Will Your Food Deductions Be Lower After Joining the Food Program?
Is the Food Program Worth it?
I'm concerned that providers may have trouble convincing their tax preparer that they can count their reimbursed meals and snacks when calculating their standard meal allowance food deduction. Therefore, I've attached a statement for providers to download and share with their tax preparer. This statement should convince any tax preparer (or Food Program sponsor). If it doesn't, I urge you to contact me for further help. (I don't charge anything for my help.)There is too much money at stake for providers to listen to this bad advice.
Image credit: https://abbottfamily.com.sg/articles/pickyeater/how-to-deal-with-fussy-kids
For more information about the Food Program and claiming food expenses, see my Family Child Care Record Keeping Guide.
