child care stabilization grant taxable

+|>Pv o+$^1-{z(*EW~l3Md Y{'m"7E:OeegN$d8=Jby&afJISI. The utilities and internet are combined. / Blog / General / child care stabilization grant taxable. A: No. Is the Child Care Provider Stabilization Grant taxable? My CPA says if it happens again I will face the hobby law. What is that law? Provider C receives a $3,500 grant and uses the money to pay for equipment that is used for both her business and her family (e.g., computer, television, furniture). 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. It affects how we all work when we can work and for many, why we work. Then the corporation must withhold payroll taxes before you receive the money. If it is permanently attached to the land, you must depreciate the business portion of the cost over 39 years. Q: Is it better to pay myself with this grant or spend it on items for my business? For further guidance on the tax implications of the Child Care Stabilization Grant, please contact your accountant or financial advisor. While each state, territory, or tribe can specify the specific uses of grant funds, the funds are intended to support providers general operating expenses, wages and benefits to employees and owners, rent, utilities, cleaning and sanitation supplies and services, and other goods and services needed to maintain or resume operations as well as mental health supports for children, families, and employees. Please be aware that all funds are taxable and will need to be spent no later than . Not all applications are guaranteed to be approved. If so, how do I do this? There is not law that requires you to stay in business. Yes. 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. 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 . You must recalculate your time-space% each year. Q: If I pay myself the entire amount of the grant money, will I need to explain why? KidKare is a comprehensive record keeping program that includes an accounting section that allows you to keep track of all your income and expenses. 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. A: You should absolutely take it. She may keep the funds in the bank account as an emergency fund for later use or she can spend it as she wishes. [-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 Q: How do I pay myself if I did not lose children during COVID, and how do I calculate it? No. Did this change? Therefore, its not a good idea to pay your husband. Now, thanks to passage of the American Rescue Plan Act of 2021, the child care sector will receive a total of more than $50 billion in direct relief funding. See this from the AARP website. Child Care Stabilization Funding DECAL recognizes the critical role that child care plays in supporting children, families, businesses, and the economy as a whole. A: All non-profits should be filing a tax return, unless your preschool is owned by the children. ?y-|G1H3/_|/I'>_|!P,0ZE2:PTon_h Biden's American Rescue Plan allotted $39 billion, which included $15 billion for a grant program and $24 billion for a child . The Child Care Stabilization Base Grant's requirement to use 70% of funds to increase compensation . Funds must be used to support the key operating expenses of child care providers to help ensure access to child care for families. A: Depends on what your state says. Q: In my state the grant money can be used to reimburse expenses back to February 2020. Can I use the grant money for these expenses? endobj stream Q: Would you need a separate account to pay yourself? 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: You can count all the hours children are present in your home. A: No. 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. 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 Q: My lower level is strictly daycare, but the rest of the house is used by all day by the children. Like if something happens and you have close or choose to close. A: Yes. A: Its totally up to you how long you want to remain in business or when you want to close. 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? Will I have to pay taxes on what I am getting reimbursed for? 32% of employers have seen some of their employees leave the workforce due to the effects of COVID-19. Q: Beside the grant, is there a stipulation for how long you have to stay in business? Is the grant taxable income? Q: Do we need to enter into KidKare if I am paying myself? Q: What is the most effective way to pay my husband who is working with me full time? All programs will receive a 1099 for grant funds received. Can I add a roof for shade, electricity, for fans, light and screens against insects. Even if I didnt get Form 1099? Q: When you give a bonus to your staff, do you treat the deduction the same as payroll deductions? Q: How to I calculate my Time Percent when children are in my care 24 hours a day? A: You must report Food Program reimbursements as taxable income. A: You can claim expenses for your vehicle using either the standard mileage method or the actual expenses method. How do I treat this on my taxes? Q: If I only have one child, can I still apply for the grant? Painting is a repair. Under federal guidance, this clearly language clearly applies to a family child care provider, even if she has no employees. Q: Can we pay ourselves in 2022 with grant money from 2021? No. The CCSG application is now closed. Get more information about KidKare. 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! Can I reallocate some of this money so I dont have to pay income taxes? Then put aside some money in a place that is low risk (bank savings account, short-term bond fund or money market account). Top of the Document . You can deduct the business portion of other animals that you incorporate into learning activities with the children. 2 0 obj Youll have to contact the state agency that administers this grant. This report provides a state-by-state overview of FFN policies and supports and highlights some examples of the ways in which states and local entities are supporting FFN providers who serve isolated families with low incomes. Distribution date Deadline; Cohort 1: (Center (100+) October 5, 2021 : October 18, 2021 at 11:59 p.m. CT: Cohort 2: Center (76-100) . These grants are in addition to other pandemic-related relief funds (e.g., CARES grants, Paycheck Protection Program loans, EIDL loans). Supporting Family Child Care to Prepare for Child Care Stabilization Grants 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. 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. 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. Using a reimbursement model, management and reporting is easy and takes the burden off your HR team. Q: If my husbands is disabled and collects Social Security Disability Insurance, will it change to regular Social Security when he reaches age 70? You can treat this as a repair and deduct your time-space% of this cost in one year. A: An employee can work fewer hours and that wont impact the grant. 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. Ive created an instructional video that answers these questions and many more. 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 if I am on payroll with my staff? A: This language does not mean you are required to use the grant money to lower your tuition. 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. Will we have to file a tax return? Q: Can I use the grant money to rewire my home? This is clearly the case if you were receiving the lower Tier II reimbursement rate before July. Programs that are awarded a grant will receive an IRS Tax Form 1099-NEC. But, they will reduce your federal and state taxable income. Well answer: One of the most common questions about this federal relief program is "how much is the grant?" Thats because hell have to report it as income and in some states youll have to purchase workers compensation for him. Therefore, my answers below may not be the same answers your state gives you. Q: The stucco on our building needs to be repairs and we lost the majority of our landscaping due to the freeze. 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). You will report less income in this situation, but you cant deduct anything that a parent owes you. Eligibility Application Recertification Questionnaire Training Grant Funds *l.dyY Keep enough records to show that children are present 24 hours. Q: May I decrease wages for employees during the grant period? Funds are in place so every eligible program can receive one grant per facility/site. Outdoor space is not considered part of the square footage of your home. Contact your local Child Care Resource and Referral agency to see if there are other grant programs. 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. But, you can pay yourself with the grant money and then buy a new air conditioner. You would report $5,000 as income and $2,000 as an expense, and end up paying taxes on the difference, or $3,000. The corporation can deduct your wages and payroll taxes. Child Care Stabilization Fund 5 Q: How many rounds of payments will be made? Is this deductible? endobj A: No. Afterwards it costs $99.00 a year. A: I dont know. 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. 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. How much will my daycare get from the childcare stabilization grant? 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. A: You cant use grant money to pay someone who is not treated as your employee. % Claim this as a house repair on Form 8829. You will owe 15.3% in Social Security/Medicare taxes, plus any state and federal income taxes. Q: How do I pay myself for the hours I work in the weekends or after work hours? <> 1 0 obj A: Having a room used exclusively for your business will greatly increase your time-space%. One extra snack per day, per child is an additional $202 deduction. A: Maybe, depending on how much of the grant you dont spend on business items. Q: Does the federal guidance for this grant require providers to gift any of it to parents? Find Stabilization Grant Applications for your State or Territory. Grant funds are not a loan that need to be paid back. Q: Are there any grants available to add on space to my home without getting a loan? You can pay yourself with the EIDL loan. This means you will pay some additional Social Security taxes, but it also means your higher profit will potentially increase your Social Security benefits. Q: Can I claim Social Security on my ex-husband? Q: If I use the grant for my IRA, can I deduct 100% of this on my taxes? You should amend your 2020 taxes and report it as income and pay taxes on the amended return. Q: Can I use the grant to landscape my backyard to build a play set for the daycare? Paying for weekly house cleaner? %PDF-1.7 Q: We store a lot of our dcor and child care stuff in our attic. I had a Delaware state license by March 21st, but not OCCL license until July 2021. What is the SC Building Blocks Grant? 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. Example 2: Provider uses full amount for business expenses Q: How do I create an emergency fund with this grant? This is not a loan. Q: If I pay a neighbor to paint my daycare with cash, how can I record this as an expense? OCFS has awarded $208 million to 12,578 child care providers through the Stabilization 2.0 for Workforce Supports grant. Q: What if I paid myself with this grant and then later realize that I can use it for items used 100% for my business. But, if you pay yourself, you can then use this money to purchase a home. Such a record could say, February 23, 2022 - $4,000 pay myself with the Stabilization grant.. 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? A: Yes, deduct your time-space% of the cost in one year. Contributions to an IRA will not reduce your Social Security/Medicare taxes. Do any repairs count as an expense for my vehicle? 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 $1750 in taxes. Is the Child Care Program Stabilization Funding taxable? around the country, mostly small businesses, who were already operating on thin margins. This could include fish, gerbils, rabbits, and so on. See the funding breakdown by state, tribe, and territory, and more information about the grant on the. p This webinar for training and technical assistance providers was presented on June 24, 2021. The following examples are meant to illustrate the different ways in which a family child care provider might utilize the grant and the tax implications of each scenario. <> A: If you dont spend all of the grant money on items used 100% for your business, it will increase your business profit. How long do I have to stay in business if I receive stabilization grant funding? A: Each state has its own rules about this. Q: How are my wages reported to Social Security? On another slide it says that state grants are taxable income. You cant count repairs if you use the standard mileage method, but you can count repairs if you use the actual expenses method. The 2022 tax season is here! Purchase of a swim spa for physical therapy, exercise, relaxation? Can I deduct this? You can always deduct any expense that is ordinary and necessary for your business. Since you cant deduct these expenses on your 2021 tax return, youll owe taxes on the amount you apply to 2020 expenses. C w5EgRQXM?O ?SUuoFt+$RAd})YT; u?P?Nrl8%Nq 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. June 02, 2021. . Q: I use my car for my business. A: You can use the grant money for all of these items. Each state will receive anywhere from $39 million to $2.9 billion in funding from the grant to distribute as they see fit to eligible child-care providers. 2 0 obj Original URL . 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. Are the One-Time Child Care Stabilization Grant funds taxable? 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 . The application process is straightforward and designed to deliver grant funds directly to Oklahoma child care programs. Can I deduct this? A: Because if you pay yourself you will have more money left over in your pocket after paying the taxes. Q: If I have staff can I still pay myself the whole amount? 3 0 obj Q: Is the Stabilization grant taxable income? A: Yes. Q: My state (Colorado) is requiring that 50% of the grant be used as tuition discounts. The purpose of STABLE is to respond to the urgent need to stabilize the child care sector in Georgia. You do not have to pay back the Stabilization grant. 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. The Stabilization Payment Program Round 2 is a nine-month payment program that runs August 2022 through April 2023. Q: What criteria is my state using to approve the Stabilization grants? After September 30, 2022, no additional CCSG awards will be made. Below is an additional series of questions and answers about the Stabilization Grant. You can use this amount with grant money. Q: I refunded two weeks of care for a family that had to quarantine. What dates matter for the child care stabilization grant? I thought it was seven years. A: I dont know the answer for your particular state, sorry. 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? Using grant money for 2020 has the same impact as paying yourself. Almost two-thirds of childcare centers are serving less than 75 children and are struggling to break even. You will always be better off financially after taking a grant, even if it increases your taxes. Applications were closed for the Child Care Stabilization 2.0 for Workforce Supports on December 14, 2022. You dont have to if you dont want to. Q: If I pay my assistant with the grant, do I still have to pay taxes on it? Q: I replaced the flooring in my kitchen. You will have to withhold and pay payroll taxes on these amounts. The NJ American Rescue Plan (ARP) Stabilization Grant is no longer accepting applications. Q: In your opinion, if I dont need the grant, should I take it? The second child care stabilization grant was released on July 5, 2022. Can painting the house be deducted as a repair? Q: I have remodeled my kitchen and bathrooms. This builds on critical down payments on relief . These grants are now available for eligible child care agencies in Tennessee. The answer is yes, these funds are taxable. Each state will determine how much a provider will receive based on a criteria they have developed. endobj These funds give them a lifeline at the perfect time. If you are an employee, your employer is withhold Social Security/Medicare taxes and sending them on to Social Security quarterly. Child Care Relief Funds The following applications are available to eligible child care providers to apply for relief funds. 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 How does this impact my taxes? Q: On my grant report I listed mortgage and utilities as expenses. Clearly a couch meets that definition. You will probably owe no more than 40% of the grant in taxes. How do I figure the deductions? A: RI DHS aims to approve two stipends to all eligible providers, depending upon fund availability. It wont matter if he doesnt sign it. Q: My business is an S Corporation. Q: Can I pay myself any amount? YGF:JKSj"tZO+rR&e ]ii D I Q: Is a new roof a major or minor repair? endobj <>/ExtGState<>/XObject<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/Annots[ 15 0 R 21 0 R 22 0 R 23 0 R 30 0 R 31 0 R 32 0 R 34 0 R 35 0 R 36 0 R 37 0 R 38 0 R 39 0 R 40 0 R 42 0 R 43 0 R 44 0 R 45 0 R 46 0 R 47 0 R 49 0 R 50 0 R 51 0 R 52 0 R 53 0 R 54 0 R 55 0 R 56 0 R 57 0 R 58 0 R 59 0 R 61 0 R 62 0 R 63 0 R 64 0 R 65 0 R 66 0 R 68 0 R 69 0 R] /MediaBox[ 0 0 612 792] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> 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. ); 45 CFR Parts 98 and 99; The American Rescue Plan (ARP) Act of 2021 A: No. If so, follow up with your state to make sure they are following their own rules. 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. Instead, start making contributions to your IRA. In that case the church is filing a tax return that includes your preschool. A: Social Security will look at your net income. The webinar was sponsored by Early Childhood Investigations. Once you apply, you will be told how much you will get. Q: Can I use the Stabilization grant to replace my old central air condition unit? Please consult your tax professional, if you have an income tax questions or concerns. 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. Q: Can I use the grant money to fully remodel my kitchen, put up new house siding, metal roof, new back deck? A: Yes, with the exception of a home, home improvement or home addition. 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. Q: If I pay myself, how much will I owe in taxes? A: State applications will often use the word personnel when describing what the grant can be used for. 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. ]ATIGJK5NF5 4 R&a&YFhJl M2z[{F6M6

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