Taxes: Separate Receipts?

[Chickenhauler]

With groceries, it would be really tough (if not impossible) to say "this gallon of milk was only served to daycare kids" or "This pizza wasn't eaten at all by anyone who lives here" or "I ate this whole bag of cookies myself".....OK, that last one is believeable.

[Jewels]

Jewels, since you are also using MMK, when you enter these items on the expense page, do you enter each item separately with the tax? Or do you try if possible, to group them together? I do them separate, but it takes so darn long!

I do them all together, If there are seven items that are time/space or 100% I enter them together, The categories, really dont mean anything, unless its a really big item that needs to be depreciated, Tom Copeland said he just put the categories in there, as a reference more as a general giude but its not completly important to always put them in the correct category, sometimes I seperate the items, If theres a toy and a cleaning......but generally most things go under supplies, and I just put notes on the whats purchased part, saying, Cleaning supplies, toys, and toothbrushes for example

[TomCopeland]

Receipts

Keeping separate receipts for business and personal expenses is very difficult, and not required by the IRS. If you have a system where you are keeping your receipts separate then go for it! I wouldn't recommend it because it's more work that you don't have to do.

For food receipts it's much easier to handle. If you use the standard meal allowance rate you don't have to keep any food receipts. Just multiply the number of meals and snacks you served by the standard rate set for the year. If you want to calculate the actual food costs for your business you must save all food receipts (business and personal).

However, if you are using the standard meal allowance method, make sure you save food receipts that have a non-food item on it (paper products, etc.). You can still deduct these items.

[legomom922]

Hey Tom,

Thanks for reply. Why is it that the IRS does not require reciepts for food, but does for everything else? Just curious...

I usually just wantch infants, and so the parents supply all their food. However, I buy special "treats", popsicles in the summer, extra milk, extra snacks to have on hand etc, so in that case would I just use the actual cost since I am not supply full meals? Or would I take the standard deduction for snacks only? (I dont even know if we an do that) Of course in this case, I dont do that everyday, and if I buy a box of animal crackers, they would last me a month!

So how would this work in my case?

BTW, I love your new blog!!

[TomCopeland]

Receipts

The reason the IRS does not require food receipts is because in 2003 I lobbied the IRS to adopt the standard meal allowance rule and they wrote a Revenue Procedure to allow this. I argued that saving food receipts was burdensome and not very accurate. The IRS estimated that it saves providers a vast number hours of paperwork each year.

If you use the standard meal allowance rule you can't claim the actual cost of some meals. It's all one way or the other. If you serve a treat, count this as a snack ($.66 in 2010).

Glad you like my new blog!

[MyAngels]

The reason the IRS does not require food receipts is because in 2003 I lobbied the IRS to adopt the standard meal allowance rule and they wrote a Revenue Procedure to allow this. I argued that saving food receipts was burdensome and not very accurate. The IRS estimated that it saves providers a vast number hours of paperwork each year.

If you use the standard meal allowance rule you can't claim the actual cost of some meals. It's all one way or the other. If you serve a treat, count this as a snack ($.66 in 2010).

Glad you like my new blog!

Thank you so much for this! Going through all those receipts year after year and adding things up was such a burden!

[dEHmom]

Keeping separate receipts for business and personal expenses is very difficult, and not required by the IRS. If you have a system where you are keeping your receipts separate then go for it! I wouldn't recommend it because it's more work that you don't have to do.

For food receipts it's much easier to handle. If you use the standard meal allowance rate you don't have to keep any food receipts. Just multiply the number of meals and snacks you served by the standard rate set for the year. If you want to calculate the actual food costs for your business you must save all food receipts (business and personal).

However, if you are using the standard meal allowance method, make sure you save food receipts that have a non-food item on it (paper products, etc.). You can still deduct these items.

so could you just take 100% of all your reasonable expenses/receipts (not personal things like clothing, and such, but just food, household items etc etc) and figure out your time/space %? Do you actually ahve to sit there and calculate each area?

[Unregistered]

I was told directly from MMK staff to use stand meal allowence as it is impossible to seperate personal from business.....I tired to claim acutal food last year and blew it cuz I had a pack of sodas and gum on the rcpt.....ugh
just do waht jewles stated....best and only way

[Abigail]

Speaking of receipts

Do receipts stay good for a year or should I photocopy them so the ink doesn't fade? I know the IRS can audit up to three years back, so if I hang onto receipts for three years, I think they would begin to fade. Is there a way to store them that will keep them safe from fading over time?

It would be easy to mark what items were daycare items and what was not, but I'm too OCD that I would take the time to check out separately just so I'm not looking at "hair spray, cat food, shirt" LOL on the receipt with craft supplies and toys and food. No, I wouldn't make a separate trip to the store, but I would separate my items and pay separately just because it's easy to do and nice in the long run for me.

[legomom922]

Do receipts stay good for a year or should I photocopy them so the ink doesn't fade? I know the IRS can audit up to three years back, so if I hang onto receipts for three years, I think they would begin to fade. Is there a way to store them that will keep them safe from fading over time?

It would be easy to mark what items were daycare items and what was not, but I'm too OCD that I would take the time to check out separately just so I'm not looking at "hair spray, cat food, shirt" LOL on the receipt with craft supplies and toys and food. No, I wouldn't make a separate trip to the store, but I would separate my items and pay separately just because it's easy to do and nice in the long run for me.

Receipts do fade depending on what store they are. I know my Target here has horrible reciepts and the ones from Christmas are already faded!

Do you have a scanner? If not, I would suggest getting a scanner, and then scanning all your reciepts to your computer. That way, if ever you needed them, tehy are safe , secure and readable, plus you dont have to worry about all space lots of papers take up. I am in the process now of scanning every document I own, so I can get rid of all this paper!

[TomCopeland]

Food Receipts

The only reason to save food receipts is because you are using the actual expenses method of claiming food expenses. If yo use this method you do not have to keep receipts separate (business and personal). It's okay to have personal food expenses on a receipt that has business items on there as well. Keeping separate business receipts is just one method of helping you to determine how much you spent on business food.

Most providers use the standard meal allowance method that doesn't require the saving of any food receipts. However - you want to save food receipts that have non-food items on the receipt. These are still deductible.

For all other business expenses that are used personally as well - add them together by expense category (supplies, toys, office expenses, repairs, etc.) and multiply them by your time-space percentage.

If your receipts are fading either scan them into your computer or photocopy them.