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Old 11-02-2010, 03:49 AM
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legomom922 legomom922 is offline
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Default Another Food Question & Daily Rates

So I gave DCM a choice of paying either $30/day and she provide all the food, or pay $35/day and I will provide all the food. They have chosen to go with the $35/day option.

So now, is it correct for me to use the $35/day as her daily rate in her contract?

And also, can I also now claim the food (using the standard IRS deuction)I will be buying with this extra $5/daily fee?

Do I know also claim the whole $35/day as income or just the $30?

I'm confusing myself....
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Old 11-02-2010, 03:57 AM
DancingQueen DancingQueen is offline
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I'm no expert - but the 35 would now be her daily rate and you would claim it as 35$ worth of income and deduct food using IRS guidelines.

it seems no different than anyone else's rate that provides food so I imagine you would handle it the same way.

i would have her contract state that her rate is 35 per day and includes meals - I don't think I'd ad wording about the $5 being extra for food.

but wait for someone with more smarts..LOL
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Old 11-02-2010, 08:07 AM
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It sounds a little like you would be cheating the system if this is how you are wording it. If you are charging the client an extra $5 so that they don't have to provide you with food then in essense they are paying for the food, not you. The IRS would have a field day with you if this was the case and you also tried to claim the standard deduction. Claiming food is for when the daycare food is already included with the regular rates at no extra charge.

For example, I serve what I serve. If the DC parents don't like it then they can provide the food themselves. If the parents provide the food I can't claim those meals that their children eat because I'm not using food that I bought to feed them. Same goes if you are charging them extra for food. The only exception is when they are infants and even then I'm not so sure how the IRS handles this. When I was on the food program if the parents did not like the formula that I supplied they could provide their own formula or breastmilk and I could still claim the meals because I still had to hand feed the infant, wierd I know but that was their rule. Like I said though, I'm not sure if this also applies for the IRS.

The way I see it, and would assume how the IRS would see it, is like this ... the parents are already paying you an extra $5 a day for food so claiming the standard food rate on top of that would be wrong since you are not actually paying for the food, they are. In essense the average FT child is in care for 10 hours a day, lets say you feed the child every 2 hours or so. Lets say you feed them breakfast, morning snack, lunch & evening snack. The 2010 rates are: $1.19 breakfast, $2.21 lunch & supper, $0.66 snacks so you would get $4.72. That's still a little less than what you are charging the parents for the food so you are better off asking the parents to pay the $5 extra and instead of claiming the standard rate.

I guess you could just word the contract how the above post says and not say anything about how if they want to provide food then it'll be cheaper and hope that the IRS doesn't catch on but be ready to explain why this family's rates and the rates of a different child that is there the same amount of hours don't have the same rates, if that second child's parents decide to go for the cheaper rates and provide their own food. Just food for thought.
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Old 11-02-2010, 08:14 AM
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I see your point, however, the dad paid me for this week, and paid me $70. I now have to claim the full $70 as income right even though 10 of it is for food? If the IRS audits me, they are going to see payments of $70 and if I were only to claim $60, and tell them the other 10 is for food, they would laugh at me..Besides, I will probably be spending more than 10 for food anyway..

Plus the parents will now want to write off the full 70..

So what do I do?
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Old 11-02-2010, 06:03 PM
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Tom can you help with this one?
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Old 11-02-2010, 06:17 PM
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I just read this in Tom's book Record-Keeping Guide on page 30. (LOL, I feel like I am in college again). Are you on the food program??

"Bear in mind that if you're on the Food Program, you can't charge parents separately for food. So if you raise your rates from $85 to $95 a week, you can't tell parents that you are now charging them $85 a week for child care and $10 a week for food. This would be against Food Program regulations."

Hope this answers your question. If you have another, I will look it up in the book! It's nice to have because it's like I'm being quizzed. I know I've read all this, but I need a refresher. PM me if you'd like more help.

My idea to fix this situation (if you're on the food program) is to give them a notice stating their rates have increased to $35/day as of such and such date. Sign and date it. Don't get an explanation in writing, you can simply say that your expenses are going up and avoid the whole food is included in the rate. That should be in your handbook whether you provide food or not and when you provide it.
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Old 11-02-2010, 08:02 PM
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Quote:
Originally Posted by sbschildcare View Post
I'm no expert - but the 35 would now be her daily rate and you would claim it as 35$ worth of income and deduct food using IRS guidelines.

it seems no different than anyone else's rate that provides food so I imagine you would handle it the same way.

i would have her contract state that her rate is 35 per day and includes meals - I don't think I'd ad wording about the $5 being extra for food.

but wait for someone with more smarts..LOL
My thoughts exactly! I see the $30 as a discount for not providing food. Besides, when you are doing your taxes, you are reporting total income, not what each family is paying. You can have 4 different families with 4 different rates, but for tax purposes, the rate difference doesn't matter. If you are on the food program, then you need to follow those rules.
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Old 11-03-2010, 05:02 AM
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No I am not on the food program.

I was offering the $30 rate because she was a friend, but I still expected her to follow all of my rules in my handbook. My handbook states I do not provide food. So she was paying 30 and not bringing any food, so thats when I said I will charge her 35 and i will supply the food.
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Old 11-03-2010, 06:15 PM
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Default food

Any money the parents pay you must be reported by you as taxable income. It doesn't matter if they are paying you just for care, or for care and food. It's all the same income. Put in your contract that their fee is $35 a day. You are always entitled to claim food expenses if you are serving food to the children. So, even if the parent is paying you partly for food ($5 a day) you can still deduct all your food expenses using either the standard meal allowance rate or the actual cost of the food.

If you are on the Food Program you can't charge the parent separately for food you buy and serve the children.

When food costs go up and you want to raise your rates to cover this, just raise your rates and don't say it's for food. That way you can get extra money and still be on the Food Program.
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Old 11-05-2010, 04:29 AM
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That makes sense. Now in your book, I believe you said if there is any deviation form your reg pricing, to make note of it on your invoices. So what I did before for this family, was on there invoice that I print from MMK, I would the reg rate of $35 and then note that they get a $5 discount, so then the bill comes to 30 not 35. So now since I am charging them the 35 with food, I put on their invoice $40 day with $5 discount. So does this mean I don't have to do it that way? Can I just put the 35 on the invoice and not mention a discount? Ya see, it does not say anywhere in my contract that if a parent would rather have me provide the food, there is an extra $5 daily charge. It only says I do not provide food, so I don't want to get in trouble for something during an audit or something. Or am I micro managing this too much? LOL
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