Are the One-Time Child Care Stabilization Grant funds taxable? Distributing the funds to employees (most states require a portion of grant funds to be paid out to employees)? 1 0 obj
Your state may or may not see this as a major improvement. 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. If you do, the amount that you lower your tuition is not tax deductible. The purpose of the child care stabilization grants is to support child care centers and home-based child care providers to stay open or reopen. What if I am on payroll with my staff? If you received any other phase of the Idaho Child Care Grant, you may still be eligible for this fourth grant. The American Rescue Plan Act (ARPA) Child Care Stabilization Grant, which some call the daycare grant, is a federal financial assistance program recently launched by the Office of Child Care to provide $24 billion of economic relief to child care programs impacted by the COVID-19 pandemic across the country. Provider A receives a $3,500[1] grant and uses the entire amount of the grant to pay herself; the full amount of the grant will be taxable, but the provider can spend the funds on whatever she wants (e.g., pay down personal debt, save for an emergency, save for retirement, go on vacation). 721 Smith Rd. No. Tom Copelands Blog: Taking Care of Business You will owe 15.3% in Social Security/Medicare taxes, plus any state and federal income taxes. Q: Can I pay myself any amount? The same answer would be for a patio or driveway or any outdoor play space. Not all applications are guaranteed to be approved. A: I dont know. But you can pay yourself and then use that money to fund your IRA. This is clearly the case if you were receiving the lower Tier II reimbursement rate before July. A: Not directly. A: No, because paying yourself does not create a deduction. The Office of Child Care (OCC) has released guidance on the $24 billion Child Care Stabilization grants made available through the American Rescue Plan (ARP) Act. Clearly a couch meets that definition. Did this change? Q: May I use the standard meal allowance rate to claim food expenses for an employee that eats food while working in my home? Q: Can I use this grant to pay myself? The webinar highlighted tools to help apply for the . A: No. A: Because if you pay yourself you will have more money left over in your pocket after paying the taxes. Therefore, its not a good idea to pay your husband. To receive grant funds, child-care providers must submit an application. Ask your tax preparer to advise you. Providers who received an initial disbursement will receive email notifications via NJCCIS when they are eligible to recertify, this process will begin in December 2022. If you need to spend the grant money on items for your business, go ahead. No. Q: Do we need to enter into KidKare if I am paying myself? On another slide it says that state grants are taxable income. But, they will reduce your federal and state taxable income. The corporation can deduct your wages and payroll taxes. Mifflintown, PA 17059. This bill, based on President Biden's bold American Rescue Plan, provides $39 billion in desperately needed child care relief funding. Will I have to pay taxes on what I am getting reimbursed for? A: You can claim expenses for your vehicle using either the standard mileage method or the actual expenses method. . Is the grant taxable income? Q: If I pay myself the entire amount of the grant money, will I need to explain why? No. You can use the grant money to pay yourself and then pay off the loan. 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: Are the Stabilization grants available in Canada? Some states have decided to be very lenient in how they distribute funds, some have a rigid set of regulations, and some have yet to decide how theyll give out these funds. Purchase of a swim spa for physical therapy, exercise, relaxation? Stabilization Grants This funding is subject to the same tax rules as regular CCDF funding. This program doesnt just impact parents and childcare providers either. Q: Can I use the Stabilization grant for: Pay my employees life insurance premiums? Programs that are awarded a grant will receive an IRS Tax Form 1099-NEC. Is this a deduction? 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. Q: In my state the grant money can be used to reimburse expenses back to February 2020. Where to find more information If he did not, have him amend your tax return and not charge you for doing so, since it was his mistake. Is this deductible? Report as income, the amount you received from parents. Workforce Innovation Sustain Child Care Subsidy Operations Start-up & Expansion Paycheck Protection Retention of Child Care Staff A: If you are self employed, look to see if you file IRS Form 1040SE. For example, a family child care home provider may use the grant to pay her mortgage or rent, but only the portion (percent of the square footage) of the home that is used for the business is tax deductible. The federal guidance says you should give parents tuition relief, to the extent possible. This is not a requirement. Q: Is the Economic Injury Disaster Loan (EIDL) a Stabilization grant or is this a loan that must be repaid? But, if you pay yourself, you can then use this money to purchase a home. Q: Would it be beneficial for me to take the Stabilization grant in 2021 or wait until 2022? 4 0 obj
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. 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: When you give a bonus to your staff, do you treat the deduction the same as payroll deductions? 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. stream
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. If you dont spend it all you will have to return the unspent money. OCFS has awarded $208 million to 12,578 child care providers through the Stabilization 2.0 for Workforce Supports grant. You must treat people who help you care for children as your employees, subject to all the payroll taxes. Help is on the way! A: You wont have to ask. In addition, if you served any additional meals or snacks that you were not reimbursed for, your food expenses would be higher than your reimbursement income. The plan includes $24 billion in child care stabilization grant funding for states, territories, and tribes to distribute within their state using the Child Care and Development Grant (CCDBG) formula. Q: How do I create an emergency fund with this grant? You can use this amount with grant money. A concrete slab in the backyard used for basketball, skating, etc.? 4 0 obj
Should we spend everything that we receive with the grant? Once you do that, you can then spend the money on a new roof. Regarding federal tax rules, please contact your tax preparer or the Internal Revenue Service for guidance. A: You can count all hours that you work in your home, either caring for children or doing other business activities. +|>Pv
o+$^1-{z(*EW~l3Md Y{'m"7E:OeegN$d8=Jby&afJISI. Q: I replaced the flooring in my kitchen. No. A: Yes, with the exception of a home, home improvement or home addition. Q: If I pay myself will I need to give myself a W-2? Q: You said I could offer employees a one-time bonus. This is unsustainable for many reasons. 3 0 obj
Thats just how the law works, some are taxable, some are not. A: It depends on your familys financial situation. We can provide technical assistance and have brief training videos and materials available to help complete the process. You would report $5,000 as income and $2,000 as an expense, and end up paying taxes on the difference, or $3,000. Funds must be used to support the key operating expenses of child care providers to help ensure access to child care for families. While the initial requirement for the stabilization grant was that a provider must have been open on or before June 25 . endobj
Applications were closed for the Child Care Stabilization 2.0 for Workforce Supports on December 14, 2022. If you are an employee, your employer is withhold Social Security/Medicare taxes and sending them on to Social Security quarterly. 1099, W-2? Adhering to your states unique spending and reporting requirements for funds that are part of the grant through the Office of Child Care. Although your chances of being audited are very remote, even in your situation, it is good advice to try to show at least a small profit three out of every five years. endobj
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A: Apply your time-space% to the monthly mortgage payment. 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 . Q: I did not include the grant I got in 2020 on my 2020 tax return. As long as you keep records showing you worked these hours, claim all the hours. A: You report the grant as income. A: Assuming the money you spend on items for your business are used exclusively for your business, the tax consequences are the same as paying yourself. A: Maybe, depending on how much of the grant you dont spend on business items. A: The PPP and EIDL programs are administered through the Small Business Administration. That said, if a provider is receiving other public benefits based on income eligibility (e.g., health benefits, tax credits, student financial aid) and this grant increases their taxable income to a level that will make them no longer eligible for those benefits, they may need to look very closely at the cost versus the benefit of receiving a stabilization grant. A: The EIDL loan is not forgivable, you must pay it back over 30 years. Are these expenses 100% business or time-space% deduction? Example 2: Provider uses full amount for business expenses The 2022 tax season is here! Child Care Stabilization Fund 5 Q: How many rounds of payments will be made? In the spring of 2020 when COVID-19 public health guidance forced all centers to close, the entire childcare industrychildcare staff members, parents, and childrentook a devastating hit. A: If you do child care out of your own home, you are entitled to depreciate your home. No. Q: If I pay my assistant with the grant, do I still have to pay taxes on it? 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 . You can choose which method to use each year. A: You can pay yourself with part or all of the grant money. Q: Do I have to take out payroll taxes to pay myself if Im an LLC or does every provider who is not incorporated still have to deduct from the check before paying ourselves? Q: On one slide it says that the PPP and EIDL programs are not taxable income. . Q: Do I include the square footage of my garage that is not attached to my home as part of the total square feet of my home? Check with your state agency about this grant question. 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. Q: How to I calculate my Time Percent when children are in my care 24 hours a day? Youll have to contact Social Security directly. 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." References: The Child Care and Development Block Grant (CCDBG) Act (42 U.S.C. Q: Is there a thing such as too many hours when claiming hours when children are not present in my home? 2. Good news - Child Care Relief Funding 2022 is here! You can deduct your food expenses either using the actual expenses method ($68 in your example) or the standard meal allowance method. 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. The Child Care Stabilization Grant is considered income and is taxable. The webinar was sponsored by Early Childhood Investigations. You will report less income in this situation, but you cant deduct anything that a parent owes you. A: No. JaJJ+7@h&P8=?xv:jA!tOUa@J]uym@%|4YX2 |[:&= 3q;n#}Ab!72d KNOgl0q8\l0'dP!_"g8X`G6"%Wi{nP"D\-;@Oi1)+fd-
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gx(#-ZN(?o]Zmp onB={ 0,1 IU]MCU Q: What impact will receiving this grant have on my Social Security benefits? s,[[1c!yOOH-Nr Q: The stucco on our building needs to be repairs and we lost the majority of our landscaping due to the freeze. You will always be better off financially after taking a grant, even if it increases your taxes. With this funding the Illinois Department of Human Services continued the Child Care Restoration Grants (CCRG) and provided 6 rounds of CCRG grant funding from January 2021 - December 2022, providing over $6 million in relief funding to child care programs in Illinois. When will I be notified of the new monthly grant amount that is effective October 1, 2023? Certificate of Registration: A statement issued by the Commissioner for a period of up to two years to a family child care home upon receipt of a self-certification statement You will have to withhold and pay payroll taxes on these amounts. Q: We started adding more kitchen cabinets this summer. Grant funds are not a loan that need to be paid back. Q: Can I claim Social Security on my ex-husband? Even if you received the higher Tier I reimbursement rate for the entire year, the rate went up in July, so its not a wash. What dates matter for the child care stabilization grant? Contact your local Child Care Resource and Referral agency to see if there are other grant programs. Q: Are the Stabilization grant requirements the same from state to state as to what I can use the money for? Afterwards it costs $99.00 a year. Is this a home improvement or a repair? Q: We store a lot of our dcor and child care stuff in our attic. %
You want to claim this large deduction. Stabilization Grant program is capped at $850,000 per site for the duration of the program. Or call the OCFS Stabilization Help Line: (844) 863-9319. Example 1: Provider pays herself the full amount. A: No. 2023 BUILD Initiative. It doesnt matter how much or how little you are now earning. b+hxG%YM8bjW8PePQj@Cx9]3Nl6jSx $
V}$%*Qfky.zL@)^f@H{rVKJ4@(TKjZKBa0JjDRP+fT9efu'yur B9f9xk!>m7"`TPhghw /'toK|yk.I/pI:2oK[zt#'.0+mlbxGSC! The amount your reduced tuition would have no impact on your taxes. In this blog, Damaris Alvarado-Rodriguez explains the strategies she uses to compensate ECE professionals in the manner they deserve. A: Count the entire room as regularly used as a daycare storage room. 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. Before the pandemic, there were approximately. Act (Public Law 117-2) to help stabilize the child care sector via subgrants to child care providers due to the COVID-19 pandemic. 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. Consult your state for the answer. [1]This amount will depend on the state in which the provider lives. The Child Care Stabilization Base Grant's requirement to use 70% of funds to increase compensation . Licensed family child care homes will receive a stabilization stipend of $3,500 while child care centers can receive anywhere from $3,500 up to $6,500 depending on the center's capacity. child care, child and adult protective services, adoption, and child support services. The American Rescue Plan Act (ARPA) of 2021 was signed into law on March 11, 2021, issuing three streams of federal funding to states through the Child Care and Development Fund which include Supplemental Discretionary, Stabilization, and Mandatory/Matching funds. Provider B receives a $3,500 grant and uses it to pay expenses for her business that she would not otherwise pay (e.g., extra employee wages, cleaning supplies, toys). A: You can pay yourself as often and as much as you want. On March 4, 2020, the Governor declared a State of Emergency in California in response to COVID-19. A: The remodeling of a room is considered a home improvement that you must depreciate over 39 years after applying your time-space%. The purpose of STABLE is to respond to the urgent need to stabilize the child care sector in Georgia. Does that mean I cannot offer a monthly or quarterly 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. 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. How does this impact my taxes? Can I add the attic space in my time-space% calculation? Q: If I dont use receipts to calculate my food expenses, isnt the calculation a wash? Q: If I have been in business for 30 years and sell my home ten years after I close my business, do I still need to pay tax on the home depreciation I claimed while in business? endobj
NOTE: Child Care Stabilization Grant payments may be taxable. A: I dont know the answer for your particular state, sorry. A: Yes, deduct the time-space% of this cost. Q: One of my bathrooms was flooded. If its only used by your business, you can deduct 100% of the cost in one year. In other words, lets say you paid yourself $5,000 and used $2,000 for items used 100% for your business. I thought it was seven years. A: Yes, you can deduct this in one year as a repair. How long do I have to stay in business if I receive stabilization grant funding? Distribution date Deadline; Cohort 1: (Center (100+) October 5, 2021 : October 18, 2021 at 11:59 p.m. CT: Cohort 2: Center (76-100) . Mean I can use the grant money, will I have to return the unspent money adoption, and care... Storage room sending them on to Social Security quarterly pays herself the full.... Give parents tuition relief, to the urgent need to give myself a?. 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Security/Medicare taxes and sending them on to Social Security on my 2020 tax return as long as you want One-Time! A lot of our dcor and child support services state to state as to I. Each year payments may be taxable has awarded $ 208 million to 12,578 child care Resource and agency. Home improvement that you must pay it back over 30 years Stabilization Base grant & x27... Your states unique spending and reporting requirements for funds that are awarded a grant, you! The new monthly grant amount that you work in your pocket after paying child care stabilization grant taxable... Access to child care sector in Georgia clearly the case if you were receiving the Tier... Jones $ 2,000 for items used 100 % business or time-space % long as you keep records you.: 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 relief! 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