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Effective: February 1, 2010 |
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20.25.20.35ar2 - In-Home Day Care (Archive) |
Archived: June 1, 2011 |
Clients who provide day care in their homes are considered self-employed for Minnesota Health Care Programs.
Note: Clients who provide day care in someone else's home are not eligible for in-home day care deductions. Treat wages from day care provided in someone else's home following standard earned income policy.
The following policy regarding in-home day care is for MA Method A, MA Method B, GAMC, MA-EPD and Medicare Savings Programs (MSP).
See Use of Home for information on calculating the use of a home deduction for in-home day care self-employed businesses.
Allowable In-Home Day Care Expenses.
Standard Meal and Snack Rates.
MA Method B, GAMC, MA-EPD and Medicare Savings Programs (MSP).
To determine net self-employment income for in-home day care deduct allowable business expenses from gross receipts.
Note: Do not count payments from the Minnesota Child Care Food Program in calculating the gross receipts of the self-employment business.
Allowable In-Home Day Care Expenses
The following expenses are allowed as business expenses for in-home day care. These expenses must be itemized if they are being used as a business expense.
l Food. See Standard Meal and Snack Rates.
l Toys and books.
l Supplies.
l Transportation.
l License fees and professional dues.
l Advertising costs.
l Equipment rental and lease expenses.
l Equipment which is not a capital expenditure.
l Expenses for use of home.
Clients who operate an in-home day care business may use either the standard meal and snack rates or actual costs of meals and snacks to compute the deductible cost of meals and snacks provided to eligible children. For these purposes:
l The clients must be engaged in the business of providing family day care.
l Family day care is child care provided to eligible children in the home of the family day care provider. The care must be non-medical, not involve a transfer of legal custody, and generally lasts less than 24 hours each day.
l Eligible children are minor children receiving family day care in the home of the family day care provider. Eligible children do not include children who are full-time or part-time residents in the home where the child care is provided or children whose parents or guardians are residents of the same home. Eligible children do not include children who receive day care services for personal reasons of the provider. For example, if a provider provides day care services for a relative as a favor to that relative, that child is not an eligible child.
Clients can compute the deductible cost of each meal and snack they actually purchased and served to an eligible child during the time period they provided family day care using the standard meal and snack rates. Clients can use the standard meal and snack rates for a maximum of one breakfast, one lunch, one dinner, and three snacks per eligible child per day. If clients receive reimbursement for a particular meal or snack, they can deduct only the portion of the applicable standard meal or snack rate that is more than the amount of the reimbursement.
The standard meal and snack rates include beverages, but do not include non-food supplies used for food preparation, service, or storage, such as containers, paper products, or utensils.
2008 Standard Meal and Snack Rates
Standard meal and snack rates for 2008 are:
n Breakfast - $1.11.
n Lunch - $2.06.
n Dinner - $2.06.
n Snack - $0.61.
2009 Standard Meal and Snack Rates
Standard meal and snack rates for 2009 are:
n Breakfast - $1.17.
n Lunch - $2.18.
n Dinner - $2.18.
n Snack - $0.65.
See IRS Publication 587, Business Use of Your Home (Including Use by Day Care Providers), for more information on the Standard Meal and Snack Rates.
In-home day care providers may use one of two ways to calculate their in-home day care expenses. Be sure to use the method most advantageous to the household.
The two methods are:
l Itemize actual allowable expenses.
Note: Do not deduct expenses reimbursed through the Minnesota Child Care Food Program.
l Take a flat rate deduction of 60% of gross receipts.
MA Method B, GAMC, MA-EPD and Medicare Savings Programs (MSP)
Allow deductions for all expenses the IRS allows as a self-employment expense. See MA/GAMC Self-Employment and IRS Publication 587, Business Use of Your Home (Including Use by Day-Care Providers).