Tax Advantages of The Child and Adult Care Food Program
· Providers are always better off financially if they join the Food Program.
· Food Program reimbursements are taxable income (federal and state), except for reimbursements for a provider’s own children (which are not taxable).
· The cost of all food served to day care children is tax deductible (whether or not it is reimbursable). Food is tax deductible whether or not the provider is on the Food Program.
| |
Tier I Food
Program Payment
|
Tier II Food
Program Payment
|
Not on Food Program
|
| |
|
|
|
|
Parent Fees (4children @ $120/week)
|
$24,960
|
$24,960
|
$24,960
|
|
Food Program Reimbursements
|
+ 4,6922
|
+ 2,2523
|
+ 0
|
|
Total Income
|
29,652
|
27,212
|
24,960
|
| |
|
|
|
|
Business Expenses
|
- 10,000
|
- 10,000
|
- 10,000
|
|
Food Expenses
|
- 4,000
|
- 4,000
|
- 4,000
|
| |
|
|
|
|
Profit
|
15,652
|
13,212
|
10,960
|
| |
|
|
|
|
Federal Taxes (35.4%*)
|
- 5,541
|
- 4,677
|
- 3,880
|
| |
|
|
|
|
Cash on Hand at End of Year
|
$ 10,111
|
$ 8,535
|
$ 7,080
|
Based on 2011 – 2012 reimbursement rates.
¹Based on a reimbursement of $17.00 per day, for four children @ one breakfast, one lunch & one snack per day for 23 days.
²Based on a reimbursement of $8.16 per day, for four children @ one breakfast, one lunch & one snack per day for 23 days.
* Based on 25% federal income tax, plus 10.4% net social security tax.
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