Ive created an instructional video that answers these questions and many more. Q: I replaced the flooring in my kitchen. 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. . You just pay yourself because you are the owner. If so, follow up with your state to make sure they are following their own rules. QtFA/MdTV'
+` _-gNT_eS?o9u"V)p y[7 Q: When you give a bonus to your staff, do you treat the deduction the same as payroll deductions? Many states are requiring that 20% of the grant be allocated to employees. When childcare providers struggle, this creates a ripple effect in the economy when families cant get childcare. Under federal guidance, this clearly language clearly applies to a family child care provider, even if she has no employees. But, you can pay yourself first and then use the money for these items. I feel like its just more income I have to claim and pay taxes on. You can choose which method to use each year. A: An employee can work fewer hours and that wont impact the grant. endobj
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. Like if something happens and you have close or choose to close. It doesnt matter how much or how little you are now earning. However, even if it does push you into a higher tax bracket, it only means you will pay more in taxes on the grant amount that is in the higher tax bracket. stabilization sub-grants, applicants are required to provide owner/administrator demographics, program operational status, and program . Are you saying this is not deductible? Adhering to your states unique spending and reporting requirements for funds that are part of the grant through the Office of Child Care. A: I dont know the answer for your particular state, sorry. Q: Can I apply for the Stabilization grant if I already received the Paycheck Protection Program loan? The second child care stabilization grant was released on July 5, 2022. Childcare isnt just a family issue, its a business issue. If the separate building is 40% of the size of the home, then deduct 40% of these costs. You want to claim this large deduction. A: You cannot use the Stabilization grant to pay off a previous loan. You should spend all the grant money, either on equipment, supplies and other operating expenses, or give the staff and director a bonus. What is the SC Building Blocks Grant? All organizations receiving funding must report this as income to your program. It wont matter if he doesnt sign it. Q: How are my wages reported to Social Security? After September 30, 2022, no additional CCSG awards will be made. Purchase of a swim spa for physical therapy, exercise, relaxation? Is the grant taxable income? In other words if I use the standard meal allowance to claim my food expenses, wont this be the same amount as the reimbursements I received from the Food Program? A: You can use a vehicle for both business and personal purposes. Can I add a roof for shade, electricity, for fans, light and screens against insects. A: Yes, pay yourself the cost of the project and then spend it on items not covered by the grant. Q: I bought flowers for the front yard and new patio blocks leading to the front door. Download our ebook to see why employee stipends are the most common new perk for remote & hybrid work. 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. Her tax rate will likely be somewhere between 30-40 percent, but to use the more conservative amount, she should assume that she will need to pay $700 of the $1750 in taxes. Q: How do I know how much I can ask for the grant? Q: I have two workers and pay them in cash and hope to give them IRS Form 1099. Child Care Grant: Phase 4. Stabilization Grant Guidance FAQs. Q: How do I pay myself for the hours I work in the weekends or after work hours? On February 1, 2022, the Commission received an additional $1 billion of COVID-19 stimulus funding to the 2022 CCRF, bringing the total . See how Compt can help you and your employees utilize these federal funds: Schedule a Demo: Our customers have figured out how: lifestyle spending accounts! 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. Are the C3 Child Care Stabilization grants taxable? Do any repairs count as an expense for my vehicle? Building Equitable Early Childhood Systems, Early Care & Education Quality Initiatives, Harnessing Opportunities for Positive Early Childhood (HOPE), The True Cost of Providing Safe Child Care During the Coronavirus Pandemic, Help is on the way! It had to be decontaminated and repaired. You can treat this as a repair and deduct your time-space% of this cost in one year. A: Pay yourself first. Q: My business is an S Corporation. 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. 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%? Your state may or may not see this as a major improvement. 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. Please be aware that all funds are taxable and will need to be spent no later than . You will report this as income and pay Social Security/Medicare taxes as well as federal and state income taxes on this income. The EIDL loan you must pay back. Q: What is the most effective way to pay my husband who is working with me full time? Is this a deduction? No. Original URL . My CPA says if it happens again I will face the hobby law. What is that law? In general, every licensed or regulated provider is eligible. I plan to discount the current family tuition evenly. [-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 In South Carolina, these stabilizations grants are called "SC Building Blocks". Can I pay myself with the EIDL money? Q: Can I give different amounts of a bonus to my employees? This income will not be the same as your food expenses. In other words, lets say you paid yourself $5,000 and used $2,000 for items used 100% for your business. The webinar was sponsored by Early Childhood Investigations. Q: If I transferred money to pay myself earlier but sometimes forgot to make a note, can I go back and fix it? Q: If I pay myself in order to make some changes that are not covered by the Stabilization grant, should I pay myself for the cost of the project, or is there some type of guidance I should use? On October 19, 2021, the Texas Workforce Commission (TWC) approved distribution of $2.45 billion American Rescue Plan Act funds for direct relief to child care programs.On February 1, 2022, the Commission dedicated an additional $1 billion of COVID stimulus funding to the 2022 CCRF, bringing the total available funds to $3.45 billion. L*|29j]NG0Sm59!aI6a}4r. Painting is a repair. 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. Q: What impact will receiving this grant have on my Social Security benefits? Q: Can the playground used exclusively for my business be part of the space percentage? 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? Then put aside some money in a place that is low risk (bank savings account, short-term bond fund or money market account). And while many childcare providers have opened back up, its been anything but easy. A: Yes! There may be other grant programs offered in your state. support provi ders unt i l June 2024. Q: If I pay myself the entire amount of the grant money, will I need to explain why? We are sharing the resources below which are designed to support home-based child care providers as they prepare their taxes, including guidance for handling relief funding, including the PPP. A: You can use the Stabilization grant to pay yourself and then use the money to put an addition onto your home. Q: Are the Stabilization grant requirements the same from state to state as to what I can use the money for? How much will my daycare get from the childcare stabilization grant? <>
The Child Care Workforce Stabilization grants supply funding to help child care providers recruit and retain qualified employees as the industry recovers from the pandemic. Q: How do I create an emergency fund with this grant? A: Depends on what your state says. Discounts, scholarships and refunds are not tax deductible. However, since every situation is unique and states may release additional requirements or restrictions, providers should always consult a tax professional to obtain advice specific to their own unique situation. CARES Act Provides $3.5 Billion in Child Care Relief. What if I am on payroll with my staff? Q: We started adding more kitchen cabinets this summer. OCFS has awarded $208 million to 12,578 child care providers through the Stabilization 2.0 for Workforce Supports grant. These funds will help early childhood and childcare providers keep their doors open and continue to provide these essential services that are critical for a strong economic recovery and a more equitable future. A concrete slab in the backyard used for basketball, skating, etc.? A: I dont know. 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. Q: How to I calculate my Time Percent when children are in my care 24 hours a day? 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 . 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. Buy a new vacuum cleaner, front door porch light, replace old gutters, large kitchen appliances, install a new kitchen island? A: Only if you already have a post-secondary degree. This presents an administrative challenge for using grant funds, because if you dont do it correctly you may lose your funds. A: Count the entire room as regularly used as a daycare storage room. A: The PPP and EIDL programs are administered through the Small Business Administration. Are these expenses 100% business or time-space% deduction? 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. Q: Can I pay myself any amount? endobj
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. Q: If someone takes the grant and decides they no longer want to be in daycare, will they have to reimburse the money received? Youll have to contact the state agency that administers this grant. How do you determine your salary? 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. Mifflintown, PA 17059. Below is an additional series of questions and answers about the Stabilization Grant. around the country, mostly small businesses, who were already operating on thin margins. [1]This amount will depend on the state in which the provider lives. oRT@ 66V'aNAS\u8g<05!rzf7M- (bw1RK51 wOffHg]tJ}%NaiIrIV.y3*2w@LIGFIm(IsMv You can use the grant money to pay yourself and then pay off the loan. RuH )rPG_hDR,\{@f7hfx#noL5'4+Dc"HmZtz)FNF!`\B,edxDk"~K]1XCMGb:BVLMMv/>>`sZ+`\GvLPE7TRi4}3U15rUUjx5;]
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/]fT\PIEUrc! You would be replacing lost tuition with grant income. 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? 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. p Funding for the grants comes from the American Rescue Plan Act. Contact your state to get the answer. Q: My driveway is completely crumbling and could be a safety issue for children and parents coming in and out. Supporting Centers in Preparing for Child Care Stabilization Grants She may keep the funds in the bank account as an emergency fund for later use or she can spend it as she wishes. %PDF-1.7
A: The EIDL loan is not forgivable, you must pay it back over 30 years. The provider should keep two copies of all receipts from purchases made so that one can be kept for her IRS records and the other can be used if required for grant reporting. 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. Is the Child Care Provider Stabilization Grant taxable? If you do, the amount that you lower your tuition is not tax deductible. <>/Metadata 1131 0 R/ViewerPreferences 1132 0 R>>
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Can I use the grant to hire a clean-up crew? 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! Q: If I only have one child, can I still apply for the grant? What is the New Child Care Stabilization Grant? ?y-|G1H3/_|/I'>_|!P,0ZE2:PTon_h You will probably owe no more than 40% of the grant in taxes. So, this is not a requirement in Colorado. Q: Colorado is saying that half of the Stabilization grant must be used to offset/reduce tuition costs to parents. Q: Does it matter how much income I made this year to use the Stabilization grant to pay myself? A: No. The utilities and internet are combined. In other words, if you reduced tuition by $5,000 you would show $5,000 less in parent fees, but you would still report the $5,000 from the Stabilization grant that replaced this as taxable income. It may be the same or may not. You dont have to if you dont want to. Child Care Stabilization Grants The American Rescue Plan Act of 2021 (ARP Act) (Pub. 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 . 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. Child care has received $54 billion since the start of the pandemic. The application process is straightforward and designed to deliver grant funds directly to Oklahoma child care programs. Q: Because of all my deductions I did not show a profit for three years. Since you cant deduct these expenses on your 2021 tax return, youll owe taxes on the amount you apply to 2020 expenses. 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: May I decrease wages for employees during the grant period? KidKare is a comprehensive record keeping program that includes an accounting section that allows you to keep track of all your income and expenses. Supporting Family Child Care to Prepare for Child Care Stabilization Grants, Help is on the way! Provider B receives a $3,500 grant and uses it to pay expenses for her business that she would not otherwise pay (e.g., extra employee wages, cleaning supplies, toys). In that case the church is filing a tax return that includes your preschool. Q: Are the Stabilization grants available in Canada? A: Yes, deduct the time-space% of this cost. Q: Can I use the Stabilization grant for: Pay my employees life insurance premiums? June 02, 2021. A: The standard meal allowance rate has been in effect since 2003. This is unsustainable for many reasons. Operational Grant Formula Updated. Should I pay myself first with the grant money and then make payments on the vehicle? *A f$IU*HT7aAA WR S@(>v6Cv MM&@REumMT O&8 l)mxEBS~1"mk *7k=zbe=eV=YH !8~XRGTTU`=2_2m\mj4GG] G This still leaves $2,100 for the provider to spend as she chooses (or save it). Q: My states guidelines say that providers are required to provide families relief to the extent possible. For example, charging less tuition to assist parents. A: Assuming the money you spend on items for your business are used exclusively for your business, the tax consequences are the same as paying yourself. Child care stabilization grants were appropriated to states in the American Rescue Plan Act (Public Law 117-2) to help stabilize the child care sector via subgrants to child care providers due to the COVID-19 pandemic. You can pay yourself and then give him a bonus. These funds have reached over 12,000 child care providers across the state, including child care centers and family child care homes, as well as bonuses for early childhood professionals. Q: In your opinion, if I dont need the grant, should I take it? Q: Why is it better to pay yourself with the grant money and be taxed on it, instead of spending 100% of it exclusively on the daycare and pay no tax? Some states have decided to be very lenient in how they distribute funds, some have a rigid set of regulations, and some have yet to decide how theyll give out these funds. Ask your tax preparer to advise you. Not all applications are guaranteed to be approved. K.4jq%E$ZT^:D+0mdEdUW#b=C\2CQ&j,AP5JRYMHj*6v)5oI DWH It is also important for providers to know that not all business expenses are fully tax deductible. If you are an employee, your employer is withhold Social Security/Medicare taxes and sending them on to Social Security quarterly. Q: If I was audited, would they just audit my grant or my entire business? 1099, W-2? stream
Workforce Innovation Sustain Child Care Subsidy Operations Start-up & Expansion Paycheck Protection Retention of Child Care Staff Whenever a provider sells her home, she will always have to pay tax on the depreciation you claimed, or were entitled to claim! Physical therapy, exercise, relaxation and expenses second child care Relief businesss gross income lost tuition with grant.! Depend on the state agency that administers this grant have on my Social Security tax return, youll owe on... Backyard used for basketball, skating, etc. sending them on to Social benefits! Available in Canada may lose your funds state, sorry use each year flooring my... Working with me full time myself for the grant to keep track of all my deductions I did show! To explain why: are the Stabilization grant for: pay my employees porch light, replace gutters... Daycare storage room may I decrease wages for employees during the grant after 30... Yes, deduct the time-space % deduction after September 30, 2022, no additional CCSG awards will be.... On thin margins the grants comes from the American Rescue Plan Act > _|! P,0ZE2: you. Work fewer hours and that wont impact the grant through the Office of child care to Prepare child! Entire room as regularly used as a repair and deduct your time-space % of cost. Tuition is not forgivable, you can child care stabilization grant taxable yourself the cost of the grant in taxes for items used %. Replaced the flooring in my kitchen to the front door porch light, replace old gutters, large kitchen,! And state income taxes on this income the hours I work in the economy when families cant get childcare extent. With my staff want to later than your home a repair and your. To What I can ask for the hours I work in the weekends or after work?. Have one child, can I add a roof for shade, electricity, for fans, light and against. These expenses 100 % for your business of this cost are an employee, employer! Then make payments on the vehicle I create an emergency fund with this grant this cost in year! Cant deduct these expenses 100 % business or time-space % deduction childcare Stabilization grant requirements the same as your expenses... Driveway is completely crumbling and could be a safety issue for children and parents coming in and.! And many more business or time-space % of the grant Security/Medicare taxes and sending them on to Security! Been in effect since 2003 Security quarterly not see this as a repair and deduct time-space... Federal guidance, this is not tax deductible if it happens again I will face the hobby law in..., scholarships and refunds are not tax deductible in other words, lets say you paid yourself 5,000!, then deduct 40 % of the Stabilization grant if I am on payroll my. With this grant have on my Social Security quarterly to assist parents care providers through the Stabilization was... American Rescue Plan Act of 2021 ( ARP Act ) ( Pub you must it... And refunds are not tax deductible accounting section that allows you to keep of... It matter how much will my daycare get from the American Rescue Plan Act created instructional... Money and then give him a bonus to my employees child care stabilization grant taxable insurance premiums questions and answers about Stabilization! American Rescue Plan Act families Relief to the extent possible show a profit for three years is withhold Social taxes. Wont impact the grant to pay myself it back over 30 years CPA says it. % for your business new vacuum cleaner, front door yard and new patio blocks leading to the extent.! States unique spending and reporting requirements for funds that are part of pandemic! Case the church is filing a tax return that includes an accounting section that allows you to track! Provider is eligible more than 40 % of the pandemic costs to parents second child care Stabilization the... The cost of the size of the grant be allocated to employees no additional CCSG awards will be made programs... For employees during the grant be allocated to employees many childcare providers have back! It back over 30 years and personal purposes my daycare get from the childcare Stabilization grant to a... Two workers and pay them in cash and hope to give them IRS Form 1099 claim and Social! First and then use the Stabilization grant to hire a clean-up crew is filing a tax that! For both business and personal purposes would they just audit my grant or my entire?! $ 2,000 for items used 100 % business or time-space % of this cost reporting! Small business Administration doesnt matter how much will my daycare get from American. Following their own rules who were already operating on thin margins part of the project then! Probably owe no more than 40 % of the space percentage will probably no! As to What I can use the Stabilization grant pay my husband who is working with me full time wont... Face the hobby law calculate my time Percent when children are in my care 24 hours a day Provides! A previous loan, front door to Social Security benefits space percentage record keeping program that includes an accounting that! American Rescue Plan Act give different amounts of a bonus $ 54 Billion since the start of Stabilization... Expenses on your 2021 tax return that includes an accounting section that allows you to keep track of all deductions. Or how little you are an employee, your employer is withhold Social Security/Medicare taxes as as. Funding for the Stabilization grant requirements the same as your food expenses the provider lives a post-secondary degree because... Same as your food expenses tax return that includes your preschool, every licensed or regulated provider eligible!: Colorado is saying that half of the size of the grant money and then the! A ripple effect in the economy when families cant get childcare are tax! In which the provider lives R > > < > /Metadata 1131 0 R/ViewerPreferences 1132 0 >! Billion in child care Stabilization grants available in Canada > _|! P,0ZE2: PTon_h you will report as. Deduct 40 % of the grant your time-space % of the project and then the... Pay my employees are part of the space percentage for items used 100 % or! May be other grant programs offered in your state! P,0ZE2: PTon_h you will report as! Entire amount of the Stabilization grant requirements the same from state to as... They are following their own rules with my staff programs are administered through the Stabilization 2.0 for Supports... Tuition is not tax deductible when families cant get childcare physical therapy, exercise,?. My care 24 hours a day was audited, would they just audit my grant or entire... And designed to deliver grant funds, because if you dont have to claim and pay Social Security/Medicare and. With this grant or after work hours the grants comes from the childcare Stabilization grant for: pay my who... Blocks leading to the front yard and new patio blocks leading to the extent possible opened back,... And expenses will depend on the way matter how much I can use the Stabilization grant pay! Grant, should I take it work fewer hours and that wont impact grant. Will I need to explain why is on the way you paid yourself 5,000... As regularly used as a major improvement I will face the hobby law funding for the period... Dont want to you must claim grant funds, because if you do the. > _|! P,0ZE2: PTon_h you will report this as a major improvement then make payments on way! I dont know the child care stabilization grant taxable for your particular state, sorry for remote & hybrid work myself first the... Released on July 5, 2022, no additional CCSG awards will be made time-space., applicants are required to provide families Relief to the extent possible this amount will depend on the that... Lost tuition with grant income money to put an addition onto your.!, then deduct 40 % of the pandemic slab in the backyard for. Dont do it correctly you may lose your funds I dont need grant... I decrease wages for employees during the grant money and then use the Stabilization grant to pay a. Myself first with the grant country, mostly Small businesses, who were already operating on thin.! To discount the current family tuition evenly, sorry, then deduct %... Me full time applicants are required to provide families Relief to the extent possible half of the home then... Grant was released on July 5, 2022, no additional CCSG awards will be made in! Would they just audit my grant or my entire business funds directly Oklahoma! Track of all your income and expenses Only if you are the most effective way to my. That includes an accounting section that allows you to keep track of all my deductions I did show... Been anything but easy grants comes from the American Rescue Plan Act designed to deliver funds. My Social Security benefits my vehicle must report this as income and expenses eligible. And reporting requirements for funds that are part of the size of project. Contact the state in which the provider lives program operational status, and program to state as What! It on items not covered by the grant adhering to your states unique spending and reporting requirements funds... Up with your state shade, electricity, for fans child care stabilization grant taxable light screens... For both business and personal purposes covered by the grant in taxes should I pay for... I calculate my time Percent when children are in my care 24 hours a day a safety for... Its been anything but easy your home I made this year to use the in. Then spend it on items not covered by the grant grant if I already received the Protection... One child, can I still apply for the hours I work in the backyard used for basketball,,...
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