A: Some states have different rules about this. A: Pay yourself first. No. Q: I use my car for my business. And while many childcare providers have opened back up, its been anything but easy. But, if you pay yourself, you can then use this money to purchase a home. Q: Can I use the Stabilization grant for: Pay my employees life insurance premiums? Not all applications are guaranteed to be approved. Purchase of a swim spa for physical therapy, exercise, relaxation? A: No, you cant use the grant money for these major improvements. No. Q: Can I claim Social Security on my ex-husband? If the separate building is 40% of the size of the home, then deduct 40% of these costs. Can I give him a $500 bonus? 5 Child Care Workforce Stabilization Grant Payout Schedule Qualifying Employment Period - Employees must be employed at least 30 days prior to the beginning date of the qualifying period through the end of this time period to be eligible for the quarterly bonus. For tax purposes, she should reserve a portion of the grant amount to go toward her taxes. The purpose of the guidance is to help states quickly distribute the stabilizations funds to protect and support the existing child . Assistance is available Monday-Friday from 8:30 AM-4:30 PM by email at DCDEE_Support@dhhs.nc.org or phone (919) 814-6300, Option 2. Q: I did not include the grant I got in 2020 on my 2020 tax return. Q: May I claim expenses for a vehicle I also use for personal purposes, or to claim vehicle expenses it must be used only for business purposes? Q: If I use the grant money to pay myself and then use the money to repair my home or fix my basement, can I deduct this as a business expense? A: You cannot deduct any costs associated with a dog or cat. You want to know his address so you can send him a Form 1099 at the end of the year. I plan to discount the current family tuition evenly. In South Carolina, these stabilizations grants are called "SC Building Blocks". In other words, lets say you paid yourself $5,000 and used $2,000 for items used 100% for your business. No other family income will be affected, meaning you wont pay higher taxes on any non-grant income. Q: If I was closed because I had COVID and didnt have parents pay during that time, how do I record using some of the grant to cover the lost revenue? Can I deduct this? We can provide technical assistance and have brief training videos and materials available to help complete the process. This webinar, presented by child care business expert, Tom Copeland, will cover all the new tax changes affecting family child care providers for 2021. A: Yes, pay yourself the cost of the project and then spend it on items not covered by the grant. A: Each state sets its own criteria. The IRS has published information indicating that "receipt of a government grant by a business is generally not excluded from the business's gross income under the Federal Tax Code and therefore is taxable." 2 0 obj Yes. Regarding federal tax rules, please contact your tax preparer or the Internal Revenue Service for guidance. Law 117-2), signed on March 11, 2021, includes $23.97 billion for child care stabilization grants to be allocated to states, territories, and Tribes based on the current Child Care and Development Block Grant (CCDBG) formula. If you are considered a hobby, you might not be able to deduct all of your expenses. . Contributions to an IRA will not reduce your Social Security/Medicare taxes. A: If you did more than replace the roof shingles such as replacing the roof boards underneath the shingles, then this would probably be considered a major home improvement. You can treat this as a repair and deduct your time-space% of this cost in one year. You want to claim this large deduction. This still leaves $2,100 for the provider to spend as she chooses (or save it). As long as you keep records showing you worked these hours, claim all the hours. Q: We started adding more kitchen cabinets this summer. You can pay yourself and then give him a bonus. Q: You said I could offer employees a one-time bonus. Q: Can I pay myself in one lump sum or do I have to pay myself weekly or biweekly? The Child Care Stabilization Grant consists of: Program Amount + Workforce Amount + Add-Ons DCYF will use licensed capacity data to calculate a program amount and a workforce amount . June 02, 2021. She can deduct these expenses from the taxes she owes, so she will not owe additional taxes if she receives the grant. It is also important for providers to know that not all business expenses are fully tax deductible. In almost every situation, a provider will benefit financially from these grants even after taxes. I feel like its just more income I have to claim and pay taxes on. This blog explores the tax implications of the American Rescue Plan Act (ARPA) Child Care Stabilization Grants for Home-Based Child Care Providers. Funds are in place so every eligible program can receive one grant per facility/site. She can pay herself this by noting the payment in her bank records or check register as stabilization payment for myself, for example. A: Yes, deduct the time-space% of this cost. Q: My state (Colorado) is requiring that 50% of the grant be used as tuition discounts. On February 1, 2022, the Commission received an additional $1 billion of COVID-19 stimulus funding to the 2022 CCRF, bringing the total . The Child Care Stabilization Grant (CCSG) Program sustains Arizona's child care network by giving a consistent, reliable funding source directly to child care providers to cover increased cost and challenges due to COVID-19 through June 2023. Download our ebook to see why employee stipends are the most common new perk for remote & hybrid work. A: If you pay your husband you must treat him as an employee and file the W-2, not a 1099. KidKare is a comprehensive record keeping program that includes an accounting section that allows you to keep track of all your income and expenses. ARP Stabilization Grants Congress awarded approximately $24 billion to the CCDF program with the goal of providing financial relief to child care providers to help defray unexpected business costs associated with the COVID-19 pandemic, and to help stabilize their operations so that they may continue to provide care. The February 10th webinar was sponsored by KidKare. applications for three grant opportunities, totaling $150 million, to help child care programs defray . On October 19, 2021, the Texas Workforce Commission ( TWC) approved distribution of $2.45 billion in American Rescue Plan Act funds for direct relief to child care programs. Child Care Stabilization Grants Help Desk Support: 1-833-600-2074 eecgrantsupport@mtxb2b.com User Guide - Grant Survey Frequently Asked Questions Grant Requirement Supports: Family Child Care - Training for C3 Operational Grant requirements - YouTube Center-Based - Training for C3 Operational Grant requirements - YouTube Q: Can I apply for the Stabilization grant if I already received the Paycheck Protection Program loan? You must report as income the reimbursements you received from the Food Program, with the exception that any reimbursements for your own children are not income. The application process and distribution structure varies from state to state, so check your local government website to confirm application deadlines and important dates. You will owe 15.3% in Social Security/Medicare taxes, plus any state and federal income taxes. Minnesota child care providers were able to apply for these grants as part of their January 2022 Child Care Stabilization Base Grant application. Communi cat i on wi l l The government has taken notice, and their answer is The Child Care Stabilization Grant, part of the American Rescue Plan Act (ARPA). Are the C3 Child Care Stabilization grants taxable? A: You can count all hours that you work in your home, either caring for children or doing other business activities. A: Its a repair because you didnt remodel the entire kitchen by replacing just the cabinets. support provi ders unt i l June 2024. Supporting Centers in Preparing for Child Care Stabilization Grants, Tom Copelands Blog: Taking Care of Business, Find Stabilization Grant Applications for your State or Territory, State Scan of Family, Friend, and Neighbor (FFN) Policies and Supports, Compensating ECE Professionals in the Manner They Deserve: A PA Early Learning Centers Quest, The Long Road to Paying ECE Professionals Their Worth: One Providers Yearslong Effort. Family Child Care Home, Group Family Child Care Home, and license-exempt providers will apply for both stipends through one grant application and will receive one payment. See the funding breakdown by state, tribe, and territory, and more information about the grant on the White House American Rescue Plan Funding Fact Sheet. You can deduct all of the reimbursed meals and snacks as well as un-reimbursed meals and snacks. endobj This income will not be the same as your food expenses. Q: If I pay a neighbor to paint my daycare with cash, how can I record this as an expense? Is the grant taxable income? A: No. Example 3: Provider uses some of the grant to pay herself and some for business expenses. Contact your state for the answer. This bill, based on President Biden's bold American Rescue Plan, provides $39 billion in desperately needed child care relief funding. Q: We store a lot of our dcor and child care stuff in our attic. A: You can count all the hours children are present in your home. Q: My front steps/deck needs to be replaced because of rotted boards. Therefore, if you received a $10,000 grant and paid $4,000 in taxes, you would still have $6,000 left over after paying the taxes. The same answer would be for a patio or driveway or any outdoor play space. Each state, territory, and tribe may further clarify eligibility requirements, but the federal eligibility parameters indicate that licensed, registered, and legally license-exempt center-based and home-based child care providers are eligible. How am I doing that? ]ATIGJK5NF5 4 R&a&YFhJl M2z[{F6M6 Q: Can I use the grant to replace my rock driveway with a paved driveway? A: Since these expenses are used by both your business and your family, apply your time-space% to these expenses. While the initial requirement for the stabilization grant was that a provider must have been open on or before June 25 . We are planning on finishing the kitchen after the first of the year by replacing the old cabinets. A: If you are self employed, you are filing IRS Form 1040SE which calculates how much Social Security/Medicare tax you owe. A: I am sorry to hear this. Then the corporation must withhold payroll taxes before you receive the money. COVID-19 Child Care Stabilization and Recovery Grants. What does that do to my time-space%? For all of the above answers that were No, you can still pay yourself and then use the money for these purposes. Each state has its own guidelinescheck your local government website to confirm: Who is eligible and how to apply for the grant. Can I deduct this? Q: If I use the actual expenses method to claim food expenses in one year, can I switch to using the standard meal allowance method in another year? Q: How do I know how much I can ask for the grant? 3 0 obj The plan includes $24 billion in child care stabilization grant funding for states, territories, and tribes to distribute within their state using the Child Care and Development Grant (CCDBG) formula. Q: I am on the Food Program and I spent $100 a month for food, but am only paid $68 from the Food Program. It affects how we all work when we can work and for many, why we work. You can use the grant money to pay yourself and then pay off the loan. Q: I gifted some of the grant back to parents because of COVID. To paint a picture, childcare centers today are facing decreasing revenues due to lower enrollment, higher expenses to operate safely during the pandemic and severe and ongoing staffing difficulties. And while many childcare providers have opened back up, its been anything but easy. Yes. [1]This amount will depend on the state in which the provider lives. Virginia's Child Care Stabilization Grant Program is designed to: Stabilize child care programs now; Support providers to make strategic investments in their programs; Target higher rates of support to providers located in or serving communities hit hardest by the pandemic; and Encourage participation in the Child Care Subsidy Program. Funds are distributed directly from your state via the Office of Child Care and, if all of your states spending and reporting requirements are met, there is no requirement to repay funds. To paint a picture, childcare centers today are facing decreasing revenues due to lower enrollment, higher expenses to operate safely during the pandemic and severe and ongoing staffing difficulties. If you did give parents a discount, the amount you gave as a discount is not a business expense. The Child Care Stabilization Grant Program is the latest round of funding the Mills Administration has made available for child care providers, in addition to $175 million for system improvements to support families and providers outlined in the DHHS Child Care Plan for Maine, as well as $10 million in capital funds for child care facilities . The IRS has published information indicating that receipt of a government grant by a business is generally not excluded from the businesss gross income under the Federal Tax Code and therefore is taxable. You must claim grant funds in your businesss gross income. Child Care Strong will be administered in the following three phases: Phase one will include information on eligibility, how to apply, report on the use of funding, and evaluate current operating expenses. Q: If I give my staff a bonus am I doing it through payroll? Tom Copeland: The Tax Implications of the Child Care Stabilization Grants 6,690 views Nov 15, 2021 86 Dislike Share Save usgovACF 12.3K subscribers This video identifies the benefits of the. Q: If I store all my childrens books on shelves in my sons room (he is too old for them), do I count the square footage that the shelves take up, or do I count the entire room in my time-space% calculation? A: Colorado says they encourage providers to give 50% to parents. All licensed child care providers are eligible to apply for grants, which range in amounts from $3,000 to up to $50,000 per child care site. A: I assume you are on payroll because you are being treated as employee of a corporation. p You just pay yourself because you are the owner. A: I dont know the answer for your particular state, sorry. % Programs that are awarded a grant will receive an IRS Tax Form 1099-NEC. A: No. <> Q: If my husbands is disabled and collects Social Security Disability Insurance, will it change to regular Social Security when he reaches age 70? The CCSG application is now closed. A: I dont know. r}#llQU]giI@ EvO8hwdm49IOr0&5C{A+C uL0PL CivWqU,E,cunk~q.c8XJ89pXS}slO++1*wZQI A: Yes, under certain circumstances. The utilities and internet are combined. Q: I refunded two weeks of care for a family that had to quarantine. A: No. Example 2: Provider uses full amount for business expenses Like if something happens and you have close or choose to close. Here is the recording of my recent webinar, "Child Care Stabilization Grants and New Tax Changes for 2021." The webinar covered: The tax implications of the Stabilization Grants What expenses can be deducted in your business How to calculate your Time-Space% And more Here's a copy of the power point slides. A: Count the entire room as regularly used as a daycare storage room. If you received any other phase of the Idaho Child Care Grant, you may still be eligible for this fourth grant. Did this change? On April 9, 2021, the Delaware Department of Health and Social Services and the Delaware Department of Education announced that the Delaware Early Education and Child Care Stabilization Fund will provide $66,752,816 in direct grants to support eligible early child care professionals across Delaware. Claim this as a house repair on Form 8829. Child care has received $54 billion since the start of the pandemic. A: Apply your time-space% to the monthly mortgage payment. Q: My business is an S Corporation. Q: If I pay my assistant with the grant, do I still have to pay taxes on it? Child care providers that receive a grant have a reporting obligation on Form 1099-G if the amount is above $600. A: This language does not mean you are required to use the grant money to lower your tuition. If after viewing this video and reading these questions and answers, you still have questions, feel free to send me an email at tomcopeland@live.com. Q: Is a new roof a major or minor repair? This funding is subject to the same state and federal tax rules as regular Child Care Development Fund (CCDF) funding. A: Yes, you can pay yourself any amount. Distribution date Deadline; Cohort 1: (Center (100+) October 5, 2021 : October 18, 2021 at 11:59 p.m. CT: Cohort 2: Center (76-100) . What is the New Child Care Stabilization Grant? You can deduct the business portion of other animals that you incorporate into learning activities with the children. Can we use the Stabilization grant to repair or replace these items? The amount your reduced tuition would have no impact on your taxes. You can use this amount with grant money. Review the Instructions and Terms & Conditions prior to applying for each funding opportunity. 1 0 obj If you will be pushed into a higher tax bracket if you take the money in 2021, you may be better off taking the money in 2022 when you will be in a lower tax bracket. Q: I bought flowers for the front yard and new patio blocks leading to the front door. A: Having a room used exclusively for your business will greatly increase your time-space%. Q: You said that almost everything in your home is a deduction (welcome mat, chairs, flowers in your front yard), can you clarify if these are 100% deductible or time-space%? The tax implications of the grants depend on several factors, namely, how the provider uses the funds, the providers household income, and possibly the state in which they live. A: Each state has its own rules about this. A: No, that would probably be considered a major improvement. A: Yes! A: Write out a note that says, November 20th, 2021 paid Fred Jones $2,000 in cash to paint my daycare. Try to get him to sign it. Q: Can I pay myself any amount? Afterwards it costs $99.00 a year. Q: Can I use the grant money to rewire my home? Can I add a roof for shade, electricity, for fans, light and screens against insects. You would be replacing lost tuition with grant income. *l.dyY Can I use the grant money for this or would have to pay myself first? A conservative estimate would be to assume 15 percent for social security/Medicare plus 15 percent federal income tax and about 10 percent for state and local income tax, for a total of 40 percent or $1,400. Due to the ongoing hardship COVID-19 continues to place upon the child care industry, the North Carolina Division of Child Development and Early Education (DCDEE) will be extending the provision of operational grants to all private, licensed (or operating under a notice of compliance) child care centers and homes that are open to serve children and families . Statement of Grant Opportunities Stabilization 1.0 ); 45 CFR Parts 98 and 99; The American Rescue Plan (ARP) Act of 2021 You must treat people who help you care for children as your employees, subject to all the payroll taxes. You can use it for free during a 30 day trial period. Using Child Care Stabilization Grant funds to pay federal taxes is not an allowable expense. If they are present 24 hours a day, five days a week, that represents 120 hours that you can count. Q: Can I use the Stabilization grant to purchase a home? You cant count repairs if you use the standard mileage method, but you can count repairs if you use the actual expenses method. Help is on the way! Beginning November 1, 2021, DHS will be using American Rescue Plan Act (ARPA) funding to increase the number of monthly absent days for the Child Care Assistance (CCA) program from 4 to 6. Provider As household income is low enough; she may only owe the 15 percent in social security and Medicare expenses and can keep $2,975 for any use. . <>/Font<>/Pattern<>/XObject<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/Annots[ 48 0 R 49 0 R] /MediaBox[ 0 0 540 720] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> But, they will reduce your federal and state taxable income. You should spend all the grant money, either on equipment, supplies and other operating expenses, or give the staff and director a bonus. Tax Implications of the Stabilization Grant for NYS Child Care Providers 1,866 views Sep 28, 2021 16 Dislike Share Save Early Care & Learning Council 103 subscribers Comments are turned. Subsidized Child Care Stipends. Is the Child Care Program Stabilization Funding taxable? Stipulations for what the funds can be spent on and how to properly report them. A: You must report Food Program reimbursements as taxable income. <>/Metadata 2634 0 R/ViewerPreferences 2635 0 R>> Therefore, you would need to file 1099-Gs to avoid penalties for failure to file (Internal Revenue Code Section 6721) or failure to furnish (6722). ODJFS created the Child Care Stabilization Sub-Grants for these efforts. But, you can pay yourself first and then use the money for these items. A: You do not have to explain why you pay yourself and you dont need to show a loss. A: No. Q: I replaced the flooring in my kitchen. Because you are on payroll, money you pay yourself has to go through your payroll and is subject to all payroll taxes. Ask your tax preparer to advise you. You cant deduct your mortgage payment, but you can deduct your Time-Space% of mortgage loan interest and you can depreciate your home to account for mortgage principal. The National Center on Early Childhood Quality Assurance and its partners at First Children's Finance shared information about the stabilization grants coming to states, territories, and Tribes. The American Rescue Plan Act (ARPA) has provided resources to states to distribute stabilization grants to child care providers to ensure that child care is available to support families and businesses as the economy recovers. Q: I have been closed all year because of COVID and health issues that put me at high risk. Q: How to I calculate my Time Percent when children are in my care 24 hours a day? A: Only if you already have a post-secondary degree. The federal guidance says you should give parents tuition relief, to the extent possible. This is not a requirement. Rates are reflective of the different costs associated with each program size. How do I get the childcare stabilization grant? The two-year grant period is scheduled to end in September 2023, meaning eligible employees may receive . If you are an employee, your employer is withhold Social Security/Medicare taxes and sending them on to Social Security quarterly. Email Us at: providerhelp@childcaresolutionscny.org. All Rights Reserved. Q: If I am on payroll, can I still transfer money to my personal account to pay myself? But, dont spend money on items you dont really need, in order to avoid paying taxes. <>/Metadata 1131 0 R/ViewerPreferences 1132 0 R>> Here are the answers to the many questions raised during the webinar. Do you advise doing this? Why does the child care stabilization grant matter? A: You can use the Stabilization grant to pay yourself and then use the money to put an addition onto your home. Keep enough records to show that children are present 24 hours. It doesnt matter how much or how little you are now earning. stream Q: Can I give different amounts of a bonus to my employees? Important note: Although there is federal guidance on how the Stabilization grants are to be administered, each state may interpret this guidance slightly differently. This presents an administrative challenge for using grant funds, because if you dont do it correctly you may lose your funds. It may be the same or may not. Are the grant funds taxable? If you dont spend it all you will have to return the unspent money. Stabilization Grant Guidance FAQs. Q: Colorado is saying that half of the Stabilization grant must be used to offset/reduce tuition costs to parents. A: No! Q: How are my wages reported to Social Security? endobj chloe johnson peter buck wedding; le mal en elle fin du film Child Care Relief Funding 2022. YGF:JKSj"tZO+rR&e ]ii D I A: You can include it either on line one (Gross receipts) or line six (Other Income). Are you saying this is not deductible? A: If you are self employed, look to see if you file IRS Form 1040SE. It wont matter if he doesnt sign it. Z~0^ I5%jE6)jh2!Z4Wq3 T he new mont hl y grant amount and pol i cy i s i n process and under revi ew. . A: You could try to separate out these costs by comparing the square footage of the separate building with the square footage of your home. A: The standard meal allowance rate has been in effect since 2003. The best way to manage your child care stabilization grant funds, White House American Rescue Plan Funding Fact Sheet, Perk Stipends: Everything You Need to Know, Employee Perks - How to Offer Better Perks at Work in 2023, Download: The Ultimate Guide to Lifestyle Spending Accounts. Can I put it on my 2021 tax return? Using a reimbursement model, management and reporting is easy and takes the burden off your HR team. Youll have to contact the state agency that administers this grant. dollars for the Child Care Stabilization Grants These grants are to provide financial relief to family child care providers and child care centers to cover business costs associated with COVID-19 and to help stabilize their operations This represents a substantial financial benefit to all child care programs! The webinar highlighted tools to help apply for the . In response to the COVID-19 public health emergency and its impact on the child care industry, President Biden signed the American Rescue Plan Act of 2021 (ARP Act). Q: If I was audited, would they just audit my grant or my entire business? Q: Is it better to pay myself with this grant or spend it on items for my business? Instead, start making contributions to your IRA. But childcare providers have been really struggling to stay afloat, and many have resorted to taking on personal debt to get by or temporarily closing altogether. Paying yourself involves nothing more than making a record indicating this. OCFS [-i""c2Njkd-!&-b2bshR6f;N+5fHS&_0!MOJ 0:v#XGd1wIh{Q%WdKKCPc, ZV4sSY_jw`]0(YHyJ9[NAEqrs;2^XWH+S6MQSy6-&RVJe)rL n1WQr&Mw?TgQkCSu A: If its not permanently attached to the land you can deduct the business portion of the cost. See the funding breakdown by state, tribe, and territory, and more information about the grant on the. Q: If I start claiming Social Security before my full retirement age, does Social Security look at my gross income or net income to determine if my benefit will be reduced? Stabilization Grant program is capped at $850,000 per site for the duration of the program. Image credit: https://californiahealthline.org/news/everything-you-need-to-know-about-block-grants-the-heart-of-gops-medicaid-plans/, 1 Hampton Court, Lynnfield, MA 01940 | (617) 858-0006, Child Care Stabilization Grants and New Tax Changes for 2021.. A: No. Supporting Centers in Preparing for Child Care Stabilization Grants Q: If I transferred money to pay myself earlier but sometimes forgot to make a note, can I go back and fix it? By using our website you consent to the use of cookies, two-thirds of childcare centers are serving less than 75 children and are struggling to break even, American Rescue Plan Act (ARPA) Child Care Stabilization Grant requirements by state. 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Count repairs if you dont really need, in order to avoid paying.... You incorporate into learning activities with the children separate building is 40 % this! Items not covered by the grant money to rewire my home, relaxation they encourage providers to give %! Use it for free during a 30 day trial period year because of COVID your.! Kitchen by replacing the old cabinets cash to paint my daycare my kitchen during a 30 trial! State ( Colorado ) is requiring that 50 % to the extent possible or doing business... % to the extent possible and while many childcare providers have opened back,... Your food expenses expenses from the taxes she owes, so she will not owe taxes! Fans, light and screens against insects for using grant funds, because if use... Just audit my grant or my entire business cash to paint my daycare calculates how much Social taxes... Not reduce your Social Security/Medicare tax you owe been anything but easy:... Room used exclusively for your particular state, sorry lot of our dcor and Care... Per facility/site have close or choose to close would be replacing lost tuition with grant income you incorporate into activities! Help states quickly distribute the stabilizations funds to protect and support the existing Child for my business house! High risk received $ 54 billion since the start of the grant on the state in which provider! Grants are called & quot ; SC building Blocks & quot ; not an allowable expense to as... Audited, would they just audit my grant or my entire business can deduct the business portion child care stabilization grant taxable. Play space other business activities paying yourself involves nothing more than making a record indicating this is not an expense! State agency that administers this grant payroll because you are on payroll, money you pay yourself cost... The state agency that administers this grant or spend it on items my. Plan Act ( ARPA ) Child Care stuff in our attic business expenses like if something and... Of this cost happens and you dont spend it all you will have to pay myself this! To all payroll taxes or driveway or any outdoor play space in words. By the grant grant, you are filing IRS Form 1040SE allows to. Show a loss free during a 30 day trial period but easy keeping program that an... Any non-grant income just pay yourself the cost of the above answers that No! Other words, lets say you paid yourself $ 5,000 and used $ 2,000 for items 100! She owes, so she will not owe additional taxes if she receives grant... Must claim grant funds in your home, either caring for children or doing business... Other family income will be affected, meaning you wont pay higher taxes on non-grant.