Questions and Answers About the Food Program and Food Expenses
“How many meals and snacks can I deduct?”
“Do non-reimbursed meals need to follow CACFP guidelines to be deductible?”
“Do I claim my Food Program reimbursements as income?”
These are some of the many questions I’ve received during my February 10th webinar “How to Save Money on Your 2021 Taxes.” This webinar was sponsored by KidKare.
In this article I answer the many questions asked about the Food Program and food expenses during this webinar.
KidKare is a comprehensive record keeping program that includes an accounting section that allows you to keep track of all your income and expenses. You can use it for free during a 30 day trial period. Afterwards it costs $99.00 a year. If you do sign up, please use the referral code 0659. If you do so, this will help support the work I do helping family child care providers be more successful as a business. Get more information about KidKare.
All family child care providers should participate on the Child and Adult Care Food Program. You will always be better off financially if you do so. You must report the reimbursements you receive as income and you can deduct the food served to the children in your care, including those meals and snacks you are reimbursed.
Questions and Answers
Q: How many meals and snacks can I deduct?
A: I you use the standard meal allowance rate to claim food expenses you can deduct up to one breakfast, one lunch, one supper and three snacks per day per child, if you serve that many. The standard meal allowance rate for 2021 is $1.39 breakfast, $2.61 lunch and supper and $.78 snack.
Q: I received $6,000 reimbursement from the Food Program and my standard meal allowance deduction is $5,700. How do I report this on my taxes?
A: You should always report the reimbursement amount from the Food Program as income on Schedule C (if you are a sole proprietor). Report your food expense on Schedule C, either on line 1 or line 6. It’s unlikely that your food deduction in your case is lower than your reimbursement amount. Check your numbers again.
Q: In deducting meals, do I use the current rates that come out in July 2021 for the whole year of 2021?
A: Use the Tier I rate as of January of each year. Therefore, do not use the July 2021 rates for claiming food expenses in 2021.
Q: On what date did the Tier I food rates apply to everyone?
A: July 1, 2021.
Q: Do non-reimbursed meals need to follow CACFP guidelines to be deductible?
A: No.
Q: I’ve only claimed some months on the Food Program. Can I claim food expenses for the other months that I did not get reimbursed?
A: Yes.
Q: Do I claim my Food Program reimbursements as income?
A: Yes, with the exception that any reimbursement rates for your own children are not income. You cannot deduct any food served to your own children.
Q: What percentage of the cost of meals served to children can I deduct?
A: If you don’t use the standard meal allowance rate to claim food expenses, you can estimate the actual cost of the food served to the children. You must have business and personal food receipts to use this method. You can estimate the average cost per meal, per child or you can estimate the percentage of the total cost of food that is served to the children. My book, Family Child Care Record Keeping Guide explains in detail how to estimate food costs a number of different ways.
Q: My Food Program only reimburses me for two meals and one snack. Can I deduct the extra food that I serve them?
A: Yes, you can deduct up to one breakfast, one lunch, one supper and three snacks per day, per child, if you serve that many.
Q: You mention saving business and personal food receipts. Why?
A: This is a requirement if you are deducting food costs based on the actual cost of the food, rather than using the standard meal allowance method that does not require saving any food receipts. The reason you need all food receipts when using the actual expenses method is because in order to prove that the business receipts are really business food, you need to show personal receipts. In other words, if you only saved business receipts for eggs, how can you prove that some of the eggs were not eaten by your family. It’s only by showing personal receipts for eggs that you can prove that your business receipts are for the children.
Q: If my staff member(s) eat meals I prepare for the children, can I claim the meals she eats?
A: Yes. You can either apply the standard meal allowance method to claim meals/snacks eaten by staff in your home, or save food receipts and deduct the actual cost of the food.
Q: Will I get reimbursed for previous months of snacks served if I go back and list them?
A: You won’t get reimbursed by your Food Program sponsor for snacks you served in previous months. However, you can deduct snacks you served in previous months if you recreate a record showing that you served these snacks.
Q: I was always told that I didn’t have to claim what I received from the Food Program if I didn’t claim it on my taxes.
A: Unfortunately, that advice has been given to many providers. The Child Care Provider Audit Technique Guide clearly states that you should report the reimbursements as income.
Q: If I buy take out food to eat while I’m doing lesson plans, billing, washing toys, etc, can I claim the expense of the meal?
A: Nope. Providers cannot deduct any food that they eat at home. See the answer to the next question.
Q: I go out to eat with my husband to get away from the home and the business to clear my head. Can I claim the expense and the mileage?
A: Maybe. See my article, "When Can You Deduct a Business Meal?"
Q: If I deduct my grocery store receipts, can I still deduct additional snacks I serve?
A: No. You can either use the standard meal allowance method to claim your food expenses or use the actual expenses method. You can do both in the same year.
Q: I buy all groceries completely separate for daycare and all food is stored separately from our household groceries. Can I deduct 100% of this food, or do I still have to keep all receipt for daycare and personal food?
A: You can deduct 100% of all the food you only serve to the children. However, you still must save business and personal receipts to prove that this food was not eaten by your own family.
Tom Copeland - www.tomcopelandblog.com
Image credit: https://www.thrivingmindspreschool.ca/blog--events/noodles-please-with-a-side-of-noodles
