Feeding children every day is one of the biggest costs of running a family child care. Whether you’re already on the Child and Adult Care Food Program (CACFP) — or not quite ready yet — you do have ways to recoup a portion of what you spend on food.

This post explains the two financial “roads” you can take, what each one gives you, and why documentation is the key to keeping more of your hard-earned money either way.

 ⭐ Road 1: Participate in CACFP – Monthly Meal Reimbursements

✔ What you get

Depending on your tier (Tier I or Tier II), each reimbursable meal or snack yields a specific amount per child, per day.

These reimbursement rates are published annually by USDA. Think of it as additional income that offsets your food expenses.

✔ You are not required to submit grocery receipts

This is an important point many new providers misunderstand. Per USDA CACFP guidance:

Providers participating in CACFP do not have to submit food receipts to their Food Program sponsor, as long as they maintain daily meal counts, attendance, and menus that support the claim. 

This makes CACFP unique — it reimburses based on records, not receipt paperwork.

✔ You STILL receive tax benefits even while on CACFP

Carrie Sullivan is the Executive Director of Provider’s Network, Inc. (PNI), a family childcare home sponsoring organization in Nebraska, has shared some insights:

“If your reimbursement for the year was $6,000 but your grocery expenses were $7,000, you could deduct the extra $1,000 as a business food expense.”

This is directly aligned to IRS guidance for family child care homes, which states:

Providers may deduct the cost of food served to children beyond the amount reimbursed by CACFP.

This means

• CACFP does not eliminate your food deduction
• It simply offsets part of your food cost
• Any unreimbursed portion remains deductible

Read Sponsor Spotlight: Carrie Sullivan of Provider’s Network, Inc 

 ✔ Real-number example

Let’s break down how this works with actual numbers. Imagine you spent $7,000 on food for your childcare business last year.

Throughout the year, you:

• Served breakfast, lunch, and snacks to enrolled children
• Maintained proper CACFP documentation (meal counts, menus, attendance)
• Submitted monthly claims to your CACFP sponsor

At tax time:

1. You calculate that you received $6,000 in total CACFP reimbursements for the year
2. Your total food expenses were $7,000
3. The difference of $1,000 can be claimed as a business expense on your Schedule C

Additionally, you can still deduct food costs for:

• Infant meals that weren’t reimbursed
• Meals served during periods when you were deducted from the program
• Meals missing required components (and thus not reimbursed)
• A percentage of food that was consumed by both your business and household

For example, if you spent $1,000 on food last year but your family consumed 30% of it, you would indicate 70% business use. Parachute’s categorization system allows you to clearly separate personal consumption from legitimate business expenses, ensuring you maximize deductions while remaining compliant with tax regulations.

✔ Benefit summary of Road 1

• Monthly money in your bank account
• No receipt submission required for CACFP
• Additional food expense deductions at tax time
• Support from a sponsor
• Training, guidance, resources
• Stronger annual financial benefit overall

⭐ Road 2: Not on CACFP (Yet) – No Food Reimbursement, but Strong Tax Deductions on Food.

Some providers choose not to participate in CACFP (or aren’t ready yet). But here’s the good news: You can still deduct the cost of food you serve to children — if you document it properly.

✔ What IRS allows you to deduct

The IRS Family Child Care Tax Guide allows deductions for:

• Food served to daycare children
• Snacks
• Beverages
• Meals (whether CACFP-eligible or not)

This applies whether or not you participate in CACFP.

✔ The catch: documentation

Without records, you lose the deduction.

To take the deduction confidently, IRS guidance recommends you keep:

• Receipts for food purchases
• Menus for meals served
• Attendance or meal counts
• A summary of total annual food expenses

This is where most non-CACFP providers struggle.

✔ Real-number example

Using the same values:

If you spent $7,000 in food last year:

• You receive $0 reimbursement (because you’re not in CACFP)
• But you can deduct a portion of the entire $7,000 as a business expense with proper documentation (again, pro-rated by Time-Space % if in-home).

How the deduction works:

1. For food purchased exclusively for business use (such as meals served only to daycare children):
   – You can deduct 100% of these costs. Example: $5,000 spent solely on daycare meals = $5,000 deduction
   
2. For shared household/business food:
   – You’ll need to calculate your Time-Space percentage. This is the percentage of your home used for business × hours used for business. Parachute offers a user-friendly Time/Space Calculator to help with this calculation.
   – Deduct the appropriate percentage of your food expenses allocated to business use. Parachute’s categorization system makes it easy to clearly separate personal food consumption from business-related food expenses.
   
   The key is documentation—keep those receipts, menus, and attendance records!

Even without CACFP, that can reduce your taxable income by thousands.

✔ Why Road 2 is more work

When you’re not in CACFP:

• You must keep receipts
• You must keep logs
• You must keep records for tax substantiation
• You do not receive monthly money — it all comes at tax time

This is exactly why many non-CACFP providers eventually migrate to joining CACFP: the monthly cash flow is more impactful and requires less recordkeeping burden.

But until then — tax savings are still on the table.

⭐ How Parachute Helps You Stay Organized Either Way

Parachute isn’t what “gets you money back” — your documentation does.

Parachute is the tool that keeps everything organized, accurate, and ready for tax season so you never miss a deduction or scramble in late March.

Whether you are on Food Program or not, Parachute is a great tool for recording expenses, time/space % calculation, storing receipts, pulling reports, like Schedule C, Detailed Expenses Report (8829) for your tax professional. And also Parachute is seamlessly integrated with KidKare.

⭐ The Outcome: You stay organized, accurate, and tax-ready

Whether you’re on CACFP or not, Parachute gives you:

• Clean, centralized records
• Receipt storage
• Mileage tracking
• Organized expenses
• Easy attendance
• Parent communication logs
• Time–Space %
• Schedule C + 8829 summaries
• Year-end reports your accountant will thank you for

In short:

Parachute keeps your entire childcare business organized — so you can keep more of what you earn and never fear tax season again.