Level 4

Question

Day Care Center

Forum|Forum|9 months ago
September 22, 2025
3 replies
19 views

Does any one know if Child Day Care Centers have to report as taxable income the food reimbursements from a government agency?

ProSeries Basic

Just-Lisa-Now-

Intuit Community Champion

Of course, then they expense the food that they purchased.

It would be difficult to keep track of which food was bought with the food reimbursements and what wasn't and you wouldnt be able to deduct something that you didnt pay for.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

Alfredo1967Author

Level 4

Thank you Lisa. That is what I thought but was not certain since this new client does not receive a 1099-NEC or 1099-Misc for the reinstatement.

BobKamman

Level 15

CACFP reimbursements are considered taxable income, meaning they must be reported on your tax return. However, the amount of reimbursement does not determine your deductible food expenses—providers must track their food costs separately to ensure they maximize deductions.

There are two ways to deduct food expenses:

✔️ Actual Cost Method: Deduct the actual cost of food purchased for child care, using receipts and records.
✔️ Standard Meal Allowance Method: Deduct a fixed amount per meal or snack, based on the number of meals served, without needing receipts.

Many child care providers find the standard meal allowance method simpler and more beneficial because it allows them to deduct food costs without tracking every grocery purchase.

https://www.tomcopelandblog.com/blog/filing-your-2024-taxes-heres-what-you-need-to-know-about-cacfp-reimbursement-rates-jdnp2

Alfredo1967Author

Level 4

Thank you BobKamma fort he your great explanation and the link provided.

T

TaxGuyBill

Level 15

You can either report the income and also report the expenses, or you can just 'net' them.

Personally, it makes much more sense to me to report both the income and expenses. However, the last time I checked, the IRS Audit Guide suggested netting them. But I still report both the income and expenses.

If this is a daycare "center" that is not in a person's home, I don't think they can use the Standard Meal Allowance.

BobKamman

Level 15

@TaxGuyBill You are correct that the standard meal allowance is available only to daycare providers using their own home (which they might be calling a "Center," who knows). But Google AI disagrees about what the IRS Audit Technique Guide says about netting. I don't know if 1099's are being issued for these payments, but if not, they probably should be.

"Netting is not recommended: Some providers are incorrectly advised to "net" their reimbursements and expenses. The IRS Audit Technique Guide for child care providers recommends reporting the full reimbursement as income and taking the full deduction for food expenses."

Added later -- Here is what it says:

A. How to Report Food Reimbursement Payments
(1) Food reimbursement payments are sometimes reported on a Form 1099. If a provider received a Form 1099, the best way for the provider to report those payments is under the “Other Income” section of the Schedule C and writing in “CACFP Income.” The provider should not include the amount of the payments for his/her own children because it is not taxable. Clearly reporting the CACFP payments in this manner will assist the IRS in the selection of returns for examination. If no 1099 is received, the provider can report it under other
income or as an alternative method net the payments against the food expense.

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