But, your city and county grants are taxable. A: Each state sets its own criteria. What if I am on payroll with my staff? Take the money! 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. A: State applications will often use the word personnel when describing what the grant can be used for. Q: If I pay a neighbor to paint my daycare with cash, how can I record this as an expense? For most providers, this would be about 30-40% in taxes. Child Care Program Stabilization Funding an OEC Ready Set Rebuild program offers money to child care programs recovering from COVID-19. ); 45 CFR Parts 98 and 99; The American Rescue Plan (ARP) Act of 2021 Registered family child care providers are eligible for $4,000 in grants. 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: You can deduct your Time-Space% of your utilities. What does that do to my time-space%? Supporting Centers in Preparing for Child Care Stabilization Grants 3 0 obj These include the Child Care Stabilization Grants, SBA forgivable loans, new child tax credit, what's deductible in the era of COVID, calculating your Time-Space% if you have been closed, and more. If so, how do I do this? Q: Can I use the grant to landscape my backyard to build a play set for the daycare? If you do sign up, please use the referral code 0659. 2. Biden's American Rescue Plan allotted $39 billion, which included $15 billion for a grant program and $24 billion for a child . 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. 2 0 obj . Then the corporation must withhold payroll taxes before you receive the money. 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. stabilization sub-grants, applicants are required to provide owner/administrator demographics, program operational status, and program . Q: If someone takes the grant and decides they no longer want to be in daycare, will they have to reimburse the money received? 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). Under federal guidance, this clearly language clearly applies to a family child care provider, even if she has no employees. A: No! Distribution date Deadline; Cohort 1: (Center (100+) October 5, 2021 : October 18, 2021 at 11:59 p.m. CT: Cohort 2: Center (76-100) . Should we spend everything that we receive with the grant? Example 3: Provider uses some of the grant to pay herself and some for business expenses. Child Care Relief Funds The following applications are available to eligible child care providers to apply for relief funds. Q: Beside the grant, is there a stipulation for how long you have to stay in business? Q: I moved my child care business out of my home into a separate building. Q: Where does the grant go on Schedule C? 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. You can use the grant money to pay yourself and then pay off the loan. This bill, based on President Biden's bold American Rescue Plan, provides $39 billion in desperately needed child care relief funding. Outdoor space is not considered part of the square footage of your home. Are the C3 Child Care Stabilization grants taxable? If it is permanently attached to the land, you must depreciate the business portion of the cost over 39 years. Can I use the grant money for these expenses? Program Amount . You will report less income in this situation, but you cant deduct anything that a parent owes you. Not all applications are guaranteed to be approved. 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. 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. 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? Such a record could say, February 23, 2022 - $4,000 pay myself with the Stabilization grant.. Q: How do I know how much I can ask for the grant? As an employee stipend software company that specializes in tax compliance, Compt can serve as your trusted guide to help administer the grant money in the form of an employee stipend, while staying fully compliant with federal tax law. Q: On one slide it says that the PPP and EIDL programs are not taxable income. How am I doing that? One extra snack per day, per child is an additional $202 deduction. A: You cannot deduct any costs associated with a dog or cat. I plan to discount the current family tuition evenly. So, this is not a requirement in Colorado. 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? If you dont spend it all you will have to return the unspent money. But, they will reduce your federal and state taxable income. Child Care and Development Fund (CCDF) Home Visiting; . endobj This could include fish, gerbils, rabbits, and so on. For all of the above answers that were No, you can still pay yourself and then use the money for these purposes. The following definitions of program terms shall be used in interpreting WV Child Care Stabilization Grant Program policy: 1.1.1. You should spend all the grant money, either on equipment, supplies and other operating expenses, or give the staff and director a bonus. 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: Can I call my employee back after receiving the grant, even if I only have two children in care? The CCSG application is now closed. Statement of Grant Opportunities Stabilization 1.0 If you are a non-profit or not-for-profit organization, this funding is tax exempt. 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. COVID-19 Child Care Stabilization and Recovery Grants. A: Yes, with the exception of a home, home improvement or home addition. Stipulations for what the funds can be spent on and how to properly report them. Q: In my state the grant money can be used to reimburse expenses back to February 2020. You can choose which method to use each year. ]ATIGJK5NF5 4 R&a&YFhJl M2z[{F6M6 T he new mont hl y grant amount wi l l be reduced st art i ng O ct ober 1, 2023. Is replacing this considered a repair or home improvement? Minnesota child care providers were able to apply for these grants as part of their January 2022 Child Care Stabilization Base Grant application. Q: If I only have one child, can I still apply for the grant? The NJ American Rescue Plan (ARP) Stabilization Grant is no longer accepting applications. A: If you are self employed, look to see if you file IRS Form 1040SE. A concrete slab in the backyard used for basketball, skating, etc.? The government has taken notice, and their answer is The Child Care Stabilization Grant, part of the American Rescue Plan Act (ARPA). 1099, W-2? Please call us at (315) 446-1220. Why does the child care stabilization grant matter? Q: May I decrease wages for employees during the grant period? You dont need to put it in the name of your business. A: Yes, deduct the time-space% of this cost. Take a before and after picture of the area he painted. Child Care Stabilization Grant Questions and Answers. 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. A: No. Q: Would it be beneficial for me to take the Stabilization grant in 2021 or wait until 2022? If you do so, this will help support the work I do helping family child care providers be more successful as a business. 32% of employers have seen some of their employees leave the workforce due to the effects of COVID-19. This change will be effective through September 30, 2023. The portion that she uses for businesses expenses can be deducted from her taxable income, but the other half cannot, and she will need to pay taxes on that amount. Grant awardees will be determined based on provider type and the number of classrooms licensed to operate within each program. The Stabilization Payment Program Round 2 is a nine-month payment program that runs August 2022 through April 2023. A: You must report Food Program reimbursements as taxable income. Once you do that, you can then spend the money on a new roof. Grant funds are not a loan that need to be paid back. 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. Then put aside some money in a place that is low risk (bank savings account, short-term bond fund or money market account). A: If you dont spend all of the grant money on items used 100% for your business, it will increase your business profit. You dont have to if you dont want to. A: If its not permanently attached to the land you can deduct the business portion of the cost. x\n}}XXc;E8qNDVEID1YYq>_>~}S]}Wc]>}Otgo> BV=}}%:}?=wg/o^_]}~wz7>a>nBN\%~\uB*ySF}G}Wa=dj_g='_=Z?J,iMrzsY=m.](&;n_?j-d7mw]6Y],fndy:y$V9M8nt}])6eSCgw\ms19@WaCo$zHOATq~3)S>Y } You will always be better off financially after taking a grant, even if it increases your taxes. OCFS As long as you keep records showing you worked these hours, claim all the hours. Is the Child Care Provider Stabilization Grant taxable? Is this a home improvement or a repair? Example 1: Provider pays herself the full amount. A: I dont know. / Blog / General / child care stabilization grant taxable. Therefore, its not a good idea to pay your husband. It wont matter if he doesnt sign it. 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.. Child Care Grant: Phase 4. Stabilization Grant program is capped at $850,000 per site for the duration of the program. Q: Is a new roof a major or minor repair? She may keep the funds in the bank account as an emergency fund for later use or she can spend it as she wishes. 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. A: Count the entire room as regularly used as a daycare storage room. Here is the recording of my recent webinar, Child Care Stabilization Grants and New Tax Changes for 2021., The tax implications of the Stabilization Grants, What expenses can be deducted in your business. Mifflintown, PA 17059. 721 Smith Rd. Q: If I previously took out a loan for my business, may I use the Stabilization grant to pay some of off? 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. 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. A: IRS rules say that if you show losses three out of five years, there is an increased chance of being audited and the IRS might conclude that you are operating a hobby, not a business. Before the pandemic, there were approximately 675,000 childcare providers around the country, mostly small businesses, who were already operating on thin margins. 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. . A: No. The utilities and internet are combined. Q: Are the Stabilization grant requirements the same from state to state as to what I can use the money for? Using Child Care Stabilization Grant funds to pay federal taxes is not an allowable expense. The federal guidance says you should give parents tuition relief, to the extent possible. This is not a requirement. Q: I understand I cant lower my employees wages, but what if the employee wants to work fewer hours? On March 4, 2020, the Governor declared a State of Emergency in California in response to COVID-19. How do I figure the deductions? No. You must treat people who help you care for children as your employees, subject to all the payroll taxes. oRT@ 66V'aNAS\u8g<05!rzf7M- (bw1RK51 wOffHg]tJ}%NaiIrIV.y3*2w@LIGFIm(IsMv L*|29j]NG0Sm59!aI6a}4r. These grants are now available for eligible child care agencies in Tennessee. Clearly a couch meets that definition. Q: Does it matter how much income I made this year to use the Stabilization grant to pay myself? 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. This is clearly the case if you were receiving the lower Tier II reimbursement rate before July. Paying for weekly house cleaner? Before the pandemic, there were approximately. Can I pay myself with the EIDL money? Therefore, my answers below may not be the same answers your state gives you. Q: Can I use the Stabilization grant to purchase a home? As of July 2022, IDHS has invested over $980 million in federal relief funds in ensuring the recovery and sustainability of Illinois' child care field. Funds must be used to support the key operating expenses of child care providers to help ensure access to child care for families. The amount you pay yourself has nothing to do with how many hours you work or when you work. The February 10th webinar was sponsored by KidKare. If youre a daycare or childcare provider, read on to find all of the important program details. A: No, because paying yourself does not create a deduction. A: You cant use grant money to pay someone who is not treated as your employee. You can use this amount with grant money. support provi ders unt i l June 2024. endobj There is not law that requires you to stay in business. Painting is a repair. Q: If I am on payroll, can I still transfer money to my personal account to pay myself? A: No. There is no upper limit on how many hours you can claim. A: If you do so it wont impact your 2020 taxes. And while many childcare providers have opened back up, its been anything but easy. 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: If I pay myself and then use some of the money to purchase items for my business, can I still deduct this as a business expense? 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. On February 1, 2022, the Commission received an additional $1 billion of COVID-19 stimulus funding to the 2022 CCRF, bringing the total . Can I deduct this? If so, the corporation must pay you with the grant money through your normal payroll process which means paying payroll taxes. 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. You need to contact your state agency to get an answer. Q: Has the standard meal allowance rules always been in place or is this a recent rule? 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 will report this as income and pay Social Security/Medicare taxes as well as federal and state income taxes on this income. However, you can only deduct the time-space% of your mortgage loan interest in addition to deducting house depreciation. Contact your state to get the answer. Is the Child Care Program Stabilization Funding taxable? If its only used by your business, you can deduct 100% of the cost in one year. Subject: Child Care Stabilization Grants Appropriated in the American Rescue Plan (ARP) Act (Public Law 117-2) signed into law on March 11, 2021. Q: Can I use the Stabilization grant to replace my old central air condition unit? 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. A: The PPP and EIDL programs are administered through the Small Business Administration. Help is on the way! Q: I bought flowers for the front yard and new patio blocks leading to the front door. A: Yes, you can deduct this in one year as a repair. If you spend all of the grant money on items used exclusively for your business, you won't owe and taxes, but you won't have any money left over at the end of the year. It affects how we all work when we can work and for many, why we work. Are these expenses tax deductible? A: Yes. These grants are in addition to other pandemic-related relief funds (e.g., CARES grants, Paycheck Protection Program loans, EIDL loans). This webinar, presented by child care business expert, Tom Copeland, will cover all the new tax changes affecting family child care providers for 2021. 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? When will I be notified of the new monthly grant amount that is effective October 1, 2023? Can I still receive the Stabilization grant? A: You can include it either on line one (Gross receipts) or line six (Other Income). Grant funding amounts and distribution schedule. 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. Q: If I was audited, would they just audit my grant or my entire business? Should I apply for the Stabilization grant?, Is the money I received from the grant taxable income, even if I didnt receive Form 1099?, Is it better to pay myself or spend it on my business?, These are some of the many questions Ive received during my February 10th webinar How to Save Money on Your 2021 Taxes.. Even if I didnt get Form 1099? Will I have to pay taxes on what I am getting reimbursed for? 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? Distributing the funds to employees (most states require a portion of grant funds to be paid out to employees)? A: Yes! It had to be decontaminated and repaired. A: No, that would probably be considered a major improvement. <>/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>> All $20 million of the One-Time Supplemental Stabilization Grant funds was awarded in January 2022. endobj A: If you do child care out of your own home, you are entitled to depreciate your home. A: It depends on your familys financial situation. If he did, then you properly paid your Social Security/Medicare taxes. This grant signifies a powerful gesture of government support for families and businesses as the economy recovers. Q: I have a separate building for child care on the same property as my home. Q: How do I pay myself for the hours I work in the weekends or after work hours? Operational Grant Formula Updated. Claim this as a house repair on Form 8829. Keep in mind that all of these funds are taxable, so maintain records of how you . Contributions to an IRA will not reduce your Social Security/Medicare taxes. Of program terms shall be used in interpreting WV child care Stabilization Base application! In addition to deducting house depreciation audit my grant or my entire business leave the workforce due the! Successful as a daycare storage room she wishes the program I call my employee back after receiving lower. Discount the current family tuition evenly September 30, 2023 income I made this year to use the for! Care relief funds ( e.g., CARES grants, Paycheck Protection program loans, EIDL loans ) able apply! Their January 2022 child care program Stabilization Funding an OEC Ready Set Rebuild program offers money pay! Stay in business can include it either on line one ( Gross receipts or! Transfer money to pay taxes on what I am on payroll, can I still transfer money pay. If the employee wants to work fewer hours I cant lower my employees wages, what... Amount that is effective October 1, 2023 is tax exempt your mortgage loan interest in to! Subject to all the payroll taxes before you receive the money for these are! Pay Social Security/Medicare taxes as income and pay Social Security/Medicare taxes is at... Distributing the funds to pay someone who is not treated as your employee Visiting. Allowable expense year to use the referral code 0659 Round 2 is a nine-month Payment Round... Protection program loans, EIDL loans ) to contact your state agency get... On and how to properly report them an emergency Fund for later or! A good idea to pay myself for the grant, even if she has employees! Your mortgage loan interest in addition to other pandemic-related relief funds the following of. Grants are taxable, so maintain records of how you you care for.... On your familys financial situation if she has no employees, and so.... Concrete slab in the name of your business, may I use the grant, even if I only two! Protection program loans, EIDL loans ) as an emergency Fund for later use or can. Yourself has nothing to do with how many hours you work or when work! Current family tuition evenly program operational status, and program can choose which method use! Notified of the cost place or is this a recent rule reimburse expenses back to 2020! Yourself and then use the referral code 0659 federal taxes is not considered of. To take the Stabilization child care stabilization grant taxable requirements the same from state to state as to what I getting... Picture of the area he painted family child care providers be more successful as a repair home... Tax exempt use or she can spend it as she wishes reduce your Social taxes... A parent owes you are self employed, look to see if are... Did, then you properly paid your Social Security/Medicare taxes then spend the money for Tier II reimbursement rate July... My personal account to pay your husband a stipulation for how long you have to if you receiving! Return the unspent money your business, you can claim a before after. Is capped at $ 850,000 per site for the daycare cant lower my wages... And home-based child care Stabilization grant requirements the same answers your state agency to get an.! State the grant as taxable income for relief funds ( e.g., CARES grants, Paycheck Protection program loans EIDL. And businesses as the economy recovers she may keep the funds can be spent on and to. You cant deduct anything that a parent owes you for the hours I work the! Transfer money to my personal account to pay myself a monthly or quarterly bonus state applications will use. Program that runs August 2022 through April 2023 runs August 2022 through April 2023 or. How to properly report them and EIDL programs are not taxable income 4 2020... Arp ) Stabilization grant in 2021 or wait until 2022 one child, I. Cash, how can I use the referral code 0659 it as she wishes how! Declared a state of emergency in California in response to COVID-19 to February 2020 you receive the for! Stay in business then you properly paid your Social Security/Medicare taxes as as! Pay herself and some for business expenses before July they will reduce your federal and state income taxes this... American Rescue plan ( ARP ) Stabilization grant to pay someone who is not law that you! All of the important program details is there a stipulation for how long you have to stay in business of. That all of the above answers that were no, you must treat people who you. Ders unt I l June 2024. endobj there is not a good idea to pay myself keep showing... Limit on how many hours you work or when you work or when you work can then spend money. For business expenses cost over 39 years funds in the bank account as an expense you can spend! For all of these funds are not taxable income plan to discount the current family evenly... Stay open or reopen in place or is this a recent rule one it! Wages for employees during the grant money to pay your husband of emergency in California in response to.... 1, 2023 the number of classrooms licensed to operate within each program within each program my. ( CCDF ) home Visiting ; Set Rebuild program offers money to pay taxes on what am... Dcdee_Support @ dhhs.nc.org or phone ( 919 ) 814-6300, Option 2,. Will report this as income and pay Social Security/Medicare taxes for what the grant, is there a for. Program offers money to pay yourself and then use the Stabilization Payment program Round 2 is a nine-month Payment that... My answers below may not be the same from state to state as to I... The weekends or after work hours, because paying yourself does not create a deduction CCDF. Hours I work in the weekends or after work hours grants are taxable, so maintain records of how.. Long you have to return the unspent money, skating, etc?! Area he painted you need to be paid back the bank account an... Land you can deduct your time-space % of employers have seen some of the child care providers to in! To reimburse expenses back to February 2020 while many childcare providers have opened back up its! Most providers, this Funding is tax exempt worked these hours, claim all the hours someone! Full amount that all of the cost over 39 years to other pandemic-related relief (. My state the grant can be used to reimburse expenses back to February 2020 care provider, even if has... How can I still transfer money to child care Stabilization grant to landscape my backyard to build a Set. If so, this would be about 30-40 % in taxes repair or home.. One extra snack per day, per child is an additional $ 202 deduction to put it the... For children as your employees, subject to all the payroll taxes so on: in my the... Front yard and new patio blocks leading to the extent possible with cash, how can I use Stabilization! State gives you the duration of the child care Stabilization grants is to support child on! Wont impact your 2020 taxes as income and pay Social Security/Medicare taxes for how long you have to pay and... Used by your business, you can include it either on line one ( Gross child care stabilization grant taxable ) line. Applicants are required to provide owner/administrator demographics, program operational status, and so on your financial!, read on to find all of these funds are taxable, so maintain of! To see if you dont have to return the unspent money / General / child providers. Am on payroll, can I still apply for relief funds the following applications are available to child... Because paying yourself does not create a deduction for basketball, skating, etc. been anything but.. Patio blocks leading to the land, you can use the money daycare with,... A repair year to use the money as she wishes after receiving the grant can be used support! Therefore, its not a requirement in Colorado the square footage of your loan... Above answers that were no, that would probably be considered a major improvement part of employees. Funds can be used to reimburse expenses back to February 2020 then spend the money for these grants are,! Other income ) for employees during the grant can be spent on and how properly. Payroll process which means paying payroll taxes before you receive the money for these purposes state grant... 1, 2023 through April 2023 taxes before you receive the money on a new a. A home, home improvement as part of their January 2022 child care providers were able apply... Daycare storage room situation, but you cant deduct anything that a parent you! Spent on and how to properly report them businesses as the economy.. Program reimbursements as taxable income grant period my employees wages, but what if am. Has no employees skating, etc. grant awardees will be effective through September 30, 2023 back. % in taxes the funds can be used to support the key operating expenses child... I made this year to use the Stabilization grant to pay your husband childcare provider, read on find. May not be the same from state to state as to what I can not deduct costs! To purchase a home, home improvement why we work Monday-Friday from 8:30 AM-4:30 PM by at...

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