Overview of IRS Home Daycare Meal Rates
The IRS allows a Meal Tax Deduction for Home Daycare Centers that provide food to eligible children. You are allowed to deduct the ACTUAL FOOD COSTS or an ALLOWANCE BASED ON HOME DAYCARE MEAL RATES.
Deducting Meals as Expenses
If you provide food for your daycare recipients, do not include the expense as a cost of using your home for business. Claim it as a separate deduction on your Schedule C (Form 1040). You can never deduct the cost of food consumed by you or your family.
You can deduct as a business expense 100% of the actual cost of food consumed by your daycare recipients and generally only 50% of the cost of food consumed by your employees. However you can deduct 100% of the cost of food consumed by your employees if its value can be excluded from their wages as a “de minimis” fringe benefit.
If you deduct the actual cost of food for you daycare business, be sure to keep a separate record (with receipts) of your family’s food costs.
2014 Home Daycare Meal Rates
If you qualify as a family day care provider, you can use the standard home daycare meal rates and snack rates, instead of actual costs, to compute the deductible cost of meals and snacks provided to eligible children. For these purposes:
- A family daycare provider is a person engaged in the business of providing family daycare.
- Family daycare is childcare provided to eligible children in the home of the family daycare provider. The care must be non-medical, not involve a transfer of legal custody, and generally last less than 24 hours each day.
- Eligible children are minor children receiving family daycare in the home of the family daycare provider. Eligible children do not include children who are full-time or part-time residents in the home where the childcare is provided or children whose parents or guardians are residents of the same home. Eligible children do not include children who receive daycare services for personal reasons of the provider.
Home Daycare Meal Rates Example: If a provider provides daycare services for a relative as a favor to that relative, the child is not an eligible child.
You can compute the deductible cost of each meal and snack you actually purchased and served to an eligible child during the time period you provided family daycare using the standard meal and snack rates shown below.
You can use the standard meal and snack rates for a maximum of one breakfast, one lunch, one dinner, and three snacks per eligible child per day. If you receive reimbursement for a particular meal or snack, you can deduct only the portion of the applicable standard meal or snack rate that exceeds the amount of the reimbursement.
Home Daycare Meal Rates for 2014 Rates:
|Location of Family Daycare Provider ||Breakfast||Lunch||Dinner||Snack|
|States other than Alaska and Hawaii||$1.28||$2.40||$2.40||$0.71|
These rates are published each year in the IRS Publication 587 Business Use of Your Home.
Actual Meal Cost vs Standard Daycare Meal Rates
You can use either the standard meal and snack rates or actual costs to calculate the deductible cost of food provided to eligible children in the family daycare for any particular tax year. If you choose to use the standard meal and snack rates for a particular tax year, you must use the rates for all your deductible food costs for eligible children during that tax year. However, if you use the standard meal and snack rates in any tax year, you can use actual costs to compute the deductible cost of food in any other tax year.
If you use the standard meal and snack rates, you must maintain records to substantiate the computation of the total amount deducted for the cost of food provided to eligible children. The records kept should include the name of each child, dates and hours of attendance in the daycare, and the type and quantity of meals and snacks served. This information can be recorded in a log documenting all expenses.
When deducting actual grocery cost, it can be more difficult to prove which groceries were consumed by day care children and which groceries were consumed by your own family. Nevertheless, if actual grocery cost is likely greater than the meal allowance deduction, it is to your advantage to deduct your actual grocery costs.
The standard daycare meal rates and snack rates include beverages, but do not include non-food supplies used for food preparation, service, or storage, such as containers, paper products, or utensils.
These expenses can be claimed as a separate deduction on your Schedule C (Form 1040).