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 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.


Home Daycare Meals
Interested in healthy home daycare recipes?  Visit the "Kids Approved Meals"
website for kid friendly meals.


Standard Meal and Tax Rates
If you qualify as a family day care provider, you can use the standard meal
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.
    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.

2010 Standard Meal and Snack Rates:

Location of Family Daycare Provider Breakfast Lunch Dinner Snack
States other than Alaska and Hawaii $1.19 $2.21 $2.21 $0.66
Alaska $1.89 $3.59 $3.59 $1.07
Hawaii $1.38 $2.59 $2.59 $0.77



Actual Meal Cost vs Standard 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 deduction 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 meal 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).


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