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-...