How to Use Groceries as a Tax Deduction for your Daycare
Using food expenses is a great way to get more money back at tax time. The IRS has provided the means for home daycare businesses to get additional tax breaks, and the information is easy to use.
Instructions
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Mark envelopes by the month, and carry this month's envelope in your purse where you will remember to use it. If you look at Wal-Mart or Staples, you can find a plastic envelope with an elastic closure that can take the wear and tear of being carried in your purse, and you could transfer the receipts to a paper envelope at the end of the month.
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Shop in bulk to save money, and pay for daycare groceries separate from family groceries. This makes it easy to PROVE that you are not sneaking family food into your daycare write-offs at tax time. Mark the back of each receipt as you make your purchases, so that you don't have to guess at the end of the year.
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When you do your taxes, you can claim the food as a business expense. There are two different ways to do it; you can claim the exact amount of money that you spent on food, which you will be able to prove with your daycare receipts. The other way is to use the standard meal allowance that the IRS uses. This rate is based on CACFP reimbursement rates.
The CACFP rates for the 2008 tax year are for tier I (lower 48 states) Breakfast $1.17 Lunch or Supper $2.18 Snack .65.
For tier II Breakfast .43 Lunch or Supper $1.31 Snack .18
If you don't know which tier you are on, call your licensor and ASK! I don't even know anyone that is on tier II, and it will be worth the call to get the extra credit! - 4
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Tips & Warnings
The IRS allows you to claim one breakfast, one lunch, one supper, and three snacks per day per child, as long as they were served to the child.
Using the standard meal allowance will be much easier if you use daycare software, as the software will track your meal counts.
Resources
- Photo Credit iclipart.com
Comments
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lorettad
Feb 07, 2009
Great idea for daycare tax deductions! -
trochelle
Feb 07, 2009
Wow this is great especially if you go to Sams! -
Tyla Mac
Feb 04, 2009
Excellent tips! I'll bet a lot of Daycare owners pay way too much in taxes because they don't know about this. -
yourmamasaidwha
Feb 04, 2009
another great and useful article for daycare! awesome! -
brantsbabe
Feb 03, 2009
Great advice. 5*