What's Deductible About Christmas?
The holiday season is upon us.
Family child care providers celebrate Christmas with the children in their care in a variety of ways. If you do, you are probably spending money that you can claim as a business deduction.
Here are some of the activities providers have shared with me:
Cheryl offers a Christmas party where Santa Claus and Mrs. Claus come over. The children sing songs and Santa gives out gifts. Children make ornaments for their parents.
Karen has an annual "Gingerbread House Day" where the children decorate gingerbread houses. She gives certificates to the local zoo and children's museum as gifts.
Stephanie organizes a Christmas concert for parents and grandparents. She serves snacks and the children make crafts (jingle bell bracelet). The children make sugar cookies, decorate the tree, and make ornaments.
Jamie has an annual parents night out during the Christmas season so the parents can shop without their children.
Linda does a parents night out with a theme. Last year the theme was Frozen and she had Elsa come and do crafts with the children, singing and reading to the kids. This year she is going a brunch and the children are making gifts and cards for a hospice patient. She doesn't charge parents for this fun day.
Christina has a gingerbread decorating party with the kids and their families.
Nancy has a Christmas tea breakfast for parents and Santa stops by with gifts for the children. Afterwards she holds a small Christmas concert for the parents.
Debbie has a Polar Express party. She decorates the downstairs and the children watch the movie with breaks to do an activity. The children get bells straight from the freezer.
Tara's Toyland holds a family potluck dinner on a Sunday and the kids exchange presents with each other.
Lisa has an annual book exchange. The children bring one wrapped book for each of their friends from the home library, "Friends of the Library" store, Goodwill, or Scholastic book order. She provides book bags with her business name on them.
Not all providers celebrate the holidays:
Jennifer doesn't celebrates holidays in her program because it's a stressful time for children and she doesn't want to disrupt their routine.
All of the expenses identified above would be 100% deductible.
In general, family child care providers are entitled to deduct expenses that are "ordinary and necessary" for their business.
Expenses for Christmas, New Years, Chanukah, etc. can be considered ordinary and necessary expenses. That's because you are using these holidays to teach the children in your care about celebrations, traditions, and their meaning.
I once had an IRS audit in which the IRS wanted to deny the provider a deduction for a Christmas wreath. But she changed her position when I explained that providers do involve children in Christmas activities.
So, go ahead and celebrate! But, keep all the receipts and deduct the expenses.
Tom Copeland - www.tomcopelandblog.com
