How to Keep Track of Your Food Expenses

Keeping good records of your food expenses seems simple enough if you are a family child care provider who uses the standard meal allowance rate.

But many child care providers fail to keep the records they should. As a result, these providers lose hundreds of dollars of business deductions when audited by the IRS. I’ve seen it happen over and over again.

The IRS standard meal allowance rate allows you to claim your food expenseswithout having to keep any food receipts! Instead, you must keep the followingrecords: the name of each eligible child, dates and hours of attendance in thefamily day care, and the type and quantity of meals and snacks served.

If you are on the Food Program, your monthly claim form contains all of this information.

The Problem

The problem is that most child care providers serve meals and snacks that are not reported on their Food Program monthly claim form. This includes meals and snacks served that are beyond the three servings a day per child that can be reimbursed by the Food Program. It can also include meals and snacks that were disallowed by the Food Program.

You are entitled to deduct up to one breakfast, one lunch, one supper and three snacks per day per child, if you serve that many. Meals and snacks served to children that are not reimbursed by the Food Program do not have to be nutritious. See my article, "What is a Popsicle Worth to You?”

Unfortunately, many child care providers assume that they can claim these“ “extra” meals and snacks without keeping any records. I hear providers tell me, “It’s in my contract that I serve an afternoon snack,” or “I always serve an afternoon snack.” This is not enough. In an audit the IRS can say, “Since you didn’t keep a record during the year, I’m going to deny this afternoon snack.”

Losing this deduction can be a big deal. One snack a day served to one child for a year represents over $200 deduction on your tax return.

The IRS rule requires you to keep a daily record of all meals and snacks served. This can be as simple as recording “Sally, Monday afternoon snack,” or putting a check mark next to a symbol for a snack each day.

You can track this information if you use the accounting section of the KidKare software program. Or you can use a log found in the annual Redleaf Calendar-Keeper (The log is free online). Or, you can use any spreadsheet to track these meals and snacks.

How to Catch Up

If you don’t have a daily record showing all the non-reimbursed meals and snacks you served so far this year, what do you do?

Let’s say you always serve an afternoon snack. Put each child’s name on a piece of paper and use your attendance records to record how many days the child was in your program from the beginning of the year until now. Show your results by month (“January – 22 snacks, February – 20 snacks,” etc.).

Ask the parents of each child to sign the bottom of the paper where you have written, “This represents the number of afternoon snacks your child was served in my program from January 1st to _____.” If you occasionally served a dinner or took children to a fast food place for lunch, add this to the paper. The parents will know that their child ate these meals and snacks and should be happy to sign it.

From this day forward, keep a daily record of the “extra” meals and snacks served to the day care children. It’s okay to go back and reconstruct these records for part of a year, but don’t make this a habit. Record these meals and snacks each day going forward. Some Food Program sponsors will allow you to record your “extra” servings on your monthly claim form. Ask them if this is okay before you do so.

The Big Three

The tracking of these meals and snacks is one of the top three things you can do to reduce your taxes. The other two are: keep track of all the hours you work in your home (particularly when children are not present) and save receipts for all expenses associated with your home.

Tom Copeland - www.tomcopelangblog.com

Image credit: https://pixabay.com/photos/honey-eating-child-kid-background-3335403/

For more information, see my Family Child Care Record Keeping Guide.