Okay I never bought anything for my daycare with a gift card so this question never came up so here's the deal. I just recently had my babyshower and on top of getting everything that I would need for the new baby, I got TONS of giftcards.

So my question is this, since I have so much in gift cards and I buy things for the daycare the amount is still tax deductible right?

I mean the receipt will show that I paid with a gift card so I want to make sure that if I purchase something for the daycare I can still claim it. I need some supplies for crafts and curriculum that I need to buy and it would be great if I could use the giftcards for this but I don't want to do that unless I can still claim it. Any thoughts before I call my tax consultant for the 50th time this month?

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Maybe Tom Copeland will chime in on this but I believe you will be taxed on the amount of those gift cards. I Believe the IRS expects you to declare them as gifts.

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Good point. It's about $250 total in gifts cards that I don't think that I'll need that I received from the babyshower but I don't think I'll be needing them for anything and I don't want them to go to waste. I also don't want a whole big mess or a hassle but I guess I could always go through the process of getting them cashed (which is also not a fun process).

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You can sell them at a little bit of a loss on ebay. Put a reserve so you don't lose more than you're willing to.

I didn't know you could cash them in at the store??? Is that what you meant? Explain how you do that??

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I'm thinking being that someone else already "paid" for them, that you would not be able to claim them as a deduction, because you are not "paying" for the item. I'm sure you can think of something to buy the baby with them!

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Wow, I would be buying some new household stuff, new dishes, new bathtowels, I could spend that $250 pretty fast. If it was a gift for the baby/you, I would be upset if it was spent on daycare if I gave it to you.

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Why would it be a problem? Why would the IRS assume they are gifts? Who is to say that you didn't buy them yourself and then turn around later and use them? Many people buy the cards (Walmart as and example) and then use them to purchase their groceries and gas for the month.

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I understand what you mean but I really don't need anything and the baby already has a bank account that my dad started which we deposited some checks that were given to us also. The only thing that we would need to buy from a Target store would be supplies like toilet paper, paper towels, food etc. but it feels a shame to spend money on stuff like that that we get for cheaper at a Costco. I wasn't planning on spending the whole amount, just about $50 or so for our fall activities.

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I don'tknow if it's different in each state but in CA if a customer wants to "cash" in a gift card they have they can. It's a long process that involves going in to the store with the gift cards, calling corporate office and requesting this and then waiting for a check in the mail. It's a huge hassle and time consuming, I used to do these all of the time when I worked at a home improvement store. Oh well, I guess I'll just keep them and see if I need something.

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Not to get off the original topic of taxes, but I think that the recipient of a gift card is entitled to use it however they choose. If they want to use it to buy items for their daycare, or household , or other family members, etc. then they should do so. Either way, the baby still benefits (indirectly) because that has freed up some money somewhere. If the gift-giver ever asks what you bought with the gift card that they gave you (rude in my opinion) just tell them that you used it toward the purchase of _______ (insert baby item here). Unless you receive something handmade or custom made, I think a recipient should feel free to either use, return, or exchange a gift item for something that is more practical or suitable to their taste or situation. Just my 2 cents.

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If you use the giftcard on something else and someone asks what did you end up getting, and you respiond with the above quote, that is lying..

The whole purpose of giving gift cards in the first place, is to pick out something that does meet your tastes, the right size, color, and avoids getting 2 of one item or something you already have. To take it back to the store, or cash it in, or use it on some thing else other than what it was intended for, I feel is rude. It's a baby shower gift for the baby, and should not be used on daycare supplies, or paper towels.

I'm sure the baby does nothave everything it needs and is going to need. Gift cards do notusually expire. And what is wrong with target anyway? They have plenty of wonderful baby things, so I'm sure you can find something at some point.

If I gave a gift card for a baby shower, and found out it was cashed in or used for some other purpose, I would feel like my gift was not valued,or was important, or appreciated. How would you feel? JMO....

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Thanks Misol, and I know that people feel differently. It's just a shame because even if I bought household products like paper towels, cleaning supplies and toilet paper I don't always buy them seperate for the DC KWIM? So if I bought things like this and the DC kids used them I wouldn't be getting any kind of reimbursement right?

I really don't need anything else and I'm not going to go out and buy new curtains, dishes etc if I don't need them. I'm very frugal lol and buying something that I don't need seems so wasteful since buying something for the home would mean getting rid of the item being replaced which is perfectly good.

The gift card thing is only going to get harder since I have doubles and triples of items that need to be returned and most don't have gift receipts so guess what? The credit for those items are going on to more gift cards lol. I literally got everything on my registries and some (it was a very large babyshower).

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Oh good lord, WHY does it matter????? Why does EVERYTHING that gets posted on this forum turn into some sort of debate/argument and go off topic??????

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Welcome to the forum SandeeAR.

I didn't mean "gift" literally. It's either a loan or a gift and if the money was gifted then it needs to be declared. I know what you are all thinking but I'm not going to say it.

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Okay, I have the seventh edition of Tom Copeland's book and I looked up every reference to gifts. In the section "Examples of Deductible Children's Supplies" he lists "presents bought for your own children that are used by the children in your care." So if you get creative with your logic, you could say that the gift cards were "presents bought for your own (unborn) child" and so therefore if you got something for your daycare with them it could be deductible. I'm hoping Mr. Copeland will chime in with the real answer, since I'm suspecting that my reasoning might amount to "fuzzy math"

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Gees, I don't know. Why. Why is ALWAYS, when some certain people on here make a simple statement or a comment, it is turned into something it isn't. Something I will never figure out. Never.

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Seriously! I couldn't agree more, Crystal. I rarely (if ever) post something that is not directly related to the original poster's question or at least will follow the topic. Her question was, "can i deduct it?" If you don't know or are trying to convince her of doing something with the cards that she doesn't want to do...just keep it to yourself!! She didn't ask if it's polite to use gift cards for daycare!

My apologies to the original poster on this post, but I am so frustrated with these threads the past couple of days...

Back to the topic...

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I think it happens because of the info the OP posts about the question, which sometimes is inflammatory in nature, and then it rubs people the wrong way. Sometimes too much info is given. If this question was asked simply if the giftcards were deductable, the tone of the responses would be more favorable, but when you add in the fact that these were gifts to her at her baby shower, and now wants to use them for DC, people get offended, and start stating their opinions. If too much info about a question is given, then too much opinion is going to be given back. IMO

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And what one person thinks doesn't relate to a topic or thread, maybe another person thinks it does. Thankfully, we don't all think alike.

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OK, we are straying way off topic. I emailed Tom Copeland to see if he could answer the gifting question but if this thread continues to complain I am closing it.

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Okay yes please back to the topic ... I totally get your "fuzzy math" logic here. I went back and read through my Tom Copeland book again also and I wasn't all too clear on it still. I left a message for my tax consultant to see what they say but she'll probably take a while to get back to me.

I figure that if a gift was given to my unborn baby, in this case gift cards, but if I buy some supplies for the household and some of these items get used by my DC kids how would that make sense to not get reimbursement (deductible) for at least a portion of the amount? I mean it's not like I'm going to want to keep track of which toilet paper was bought with our own money and which rolls were bought with the gift cards so that I can make sure that the DC kids use the right roll, KWIM?

And then I get to thinking that what difference is it then whether I buy toilet paper for the house or craft supplies? In either case the DC kids would eventually use at least a part of it. I dunno lol, now my heads all jumbled up.

P.S. Although I enjoy everyones opinions and believe in everyones right to have it, let's stick to the topic so that hopefully my question gets answered. Once I figure it out then everyone can have at it lol. Again, question was "Can I use a gift card that was given to buy DC things and still claim it as a deductible?"

Thanks everyones input though. It's all very interesting to me .

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I believe that what that means is that if you BUY something with your money for YOUR kids, including, say a birthday gift, and IF your DC kids play with it also, THEN you can use T/S.

However, how can you write off something YOU did not pay for?? That sounds illegal me.. If someone gives me a exersaucer for a gift, I can't that write that off. I did not purchase it. I believe it would be the same with a gift card. It's been bought with someones else's money, so how you you write it off?

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I see your logic - see I thought it might be "fuzzy math."

Although in the Record Keeping Guide There is a section on gifts, and it does say that if you "receive cash and then spend it on items for your business, or if you receive a large item, such as a swing set, you can deduct the cost of these items as a business expense." I would imagine you'd have to declare any gifts received as income as well.

I would strongly suggest that if someone is not sure about something like this that they consult an accountant who is familiar with the special needs of daycare providers. That's why I write a great big check every single year to mine , so that I can make sure that I stay on the right side of the IRS.

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Here's the deal:
If you get a gift card from a friend (that is, someone who is giving you a gift as a friend, not because of a business relationship) then the gift card is not income. It sounds like this baby shower was a gathering of "friends", not a gathering of day care parents.

If you get a gift card from a day care parent, this should be reported as income. Any cash or gift cards from day care parents, even if they call it a "gift" is reportable income. This is because you are receiving this as a result of your business relationship. However, if you receive a thing (book, scarf, flowers, etc.) from a day care parent then this would be called a gift and is not income.

No matter who you get the gift card from, if you spend the gift card on something that is used in your business you can deduct it under the normal rules of business deductions.

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Awsome thanks Tom. I did call my tax consultant and have yet to receive a call back . Apparently I'm only important at the beginning of the year when I give her money to prepare my taxes lol!

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