In late 2003, the IRS issued a procedure (Revenue Procedure 2003-196) listing the standard meal rates daycare providers can use to determine their deduction for meal and snack food expenses. If you do not keep all of your food purchase records, this procedure could provide you with a larger tax deduction. If you keep good records, you can choose a deduction based upon your actual costs and the IRS provided standard rates. The standard allowance method can be used by both licensed and unlicensed day care facilities.
The standard allowance amounts appear to be quite conservative, and in most cases actual expenses will be much higher. However, it is possible (but not likely), your tax deduction using the standard allowance is higher than your actual costs. If this occurs, you are entitled to take the higher deduction.
For year 2015 and 2016and the 1st 6 months of 2017, the standard allowances are the following:
* (1st 6 months of year)
You can take a maximum of one breakfast, lunch, and dinner, and three snacks per eligible child per day. The allowances are for the cost of food and beverages. Paper, cleaning supplies and other costs are not included, therefore you can deduct the standard allowance plus your paper and other supply cost.
If you use the standard meal and snack rate
method, you still have to keep records on
the types and number of meals served to
the eligible children in your daycare business. The
records need to include the names of eligible children, dates they
attended, and types of meals served (e.g. snack, lunch, dinner).
The IRS procedure also includes a log that day care providers can use to keep track of meals.