Child Care Food Grant Reimbursements

[Gloria]

The IRS has the following listed on their web page regarding food program reimbursements:

Food program payments to daycare providers. If you operate a daycare service and receive payments under the Child and Adult Care Food Program administered by the Department of Agriculture that are not for your services, the payments generally are not included in your income. However, you must include in your income any part of the payments you do not use to provide food to individuals eligible for help under the program.

My question is: if the reimbursements are not taxable would the child care providers reduce their food expenses by the amount reimbursed? And what do they mean by "that are not for your services".

I have a client that received $5,312 in reimbursements and had food expenses of $7,428 -- so it seems that I should reduce the expense by the reimbursement. The T/P runs the child care and prepares the meals with help--so she would provide the service.

If any of you have experience in this area --- I will appreciate your advice.

Thanks in advance.

[lbbwest]

The IRS has the following listed on their web page regarding food program reimbursements:

Food program payments to daycare providers. If you operate a daycare service and receive payments under the Child and Adult Care Food Program administered by the Department of Agriculture that are not for your services, the payments generally are not included in your income. However, you must include in your income any part of the payments you do not use to provide food to individuals eligible for help under the program.

They are talking about the situation where your client receives $5,312 in reimbursements, spends $4,312 for the children in the daycare, then the balance of $1,000 is income.[/font

]My question is: if the reimbursements are not taxable would the child care providers reduce their food expenses by the amount reimbursed? YES

And what do they mean by "that are not for your services" The payments are not for the time to purchase or prepare the food, simply for the food.

I have a client that received $5,312 in reimbursements and had food expenses of $7,428 -- so it seems that I should reduce the expense by the reimbursement. THIS IS CORRECT

The T/P runs the child care and prepares the meals with help--so she would provide the service. YOU are overthinking. Food expense = $2,116 ($7248 - $5312)

If any of you have experience in this area --- I will appreciate your advice.

Thanks in advance.

[Gloria]

Thank you very much -- your answers are very clear -- I appreciate it.