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. 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. ]ATIGJK5NF5 4 R&a&YFhJl M2z[{F6M6 However, you can only deduct the time-space% of your mortgage loan interest in addition to deducting house depreciation. 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. Keep in mind that all of these funds are taxable, so maintain records of how you . Q: If I pay a neighbor to paint my daycare with cash, how can I record this as an expense? Q: Can I call my employee back after receiving the grant, even if I only have two children in care? 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? Is the child care stabilization grant taxable? Q: If I pay myself, how much will I owe in taxes? These grants are now available for eligible child care agencies in Tennessee. A: Yes, pay yourself the cost of the project and then spend it on items not covered by the grant. 1099, W-2? See this from the AARP website. Q: If I use the actual expenses method to claim food expenses in one year, can I switch to using the standard meal allowance method in another year? There may be other grant programs offered in your state. Q: Does the federal guidance for this grant require providers to gift any of it to parents? Please consult your tax professional, if you have an income tax questions or concerns. 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! How do I figure the deductions? The parents got a benefit, but you didnt. 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. 721 Smith Rd. L*|29j]NG0Sm59!aI6a}4r. The Child Care Stabilization Grant is income to your business and is taxable by the state and federal government. No. In this blog, Damaris Alvarado-Rodriguez explains the strategies she uses to compensate ECE professionals in the manner they deserve. Can I put it on my 2021 tax return? A: You can apply some of the grant money to cover lost revenue, but you cant deduct lost revenue as a business expense. What does that do to my time-space%? The same answer would be for a patio or driveway or any outdoor play space. But, if you pay yourself, you can then use this money to purchase a home. This is not a loan. Phase two will include application, awarding, and issuing of funding. Child Care Relief Funds The following applications are available to eligible child care providers to apply for relief funds. A: No. 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? If the separate building is 40% of the size of the home, then deduct 40% of these costs. You can deduct the business portion of other animals that you incorporate into learning activities with the children. 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.. Since you cant deduct these expenses on your 2021 tax return, youll owe taxes on the amount you apply to 2020 expenses. Applications were closed for the Child Care Stabilization 2.0 for Workforce Supports on December 14, 2022. A: Each state has its own rules about this. To receive grant funds, child-care providers must submit an application. Contact your state to get the answer. 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? Q: If I pay myself will I need to give myself a W-2? Q: If my husbands is disabled and collects Social Security Disability Insurance, will it change to regular Social Security when he reaches age 70? Is the Child Care Provider Stabilization Grant taxable? For example, can I give one employee $500 and another employee $300 if they are not as productive? 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. 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? . A: If you are self employed, you are filing IRS Form 1040SE which calculates how much Social Security/Medicare tax you owe. Tom Copelands Blog: Taking Care of Business It affects how we all work when we can work and for many, why we work. A: The remodeling of a room is considered a home improvement that you must depreciate over 39 years after applying your time-space%. For specific questions about the NJ ARP Stabilization Grant application, contact: Email: njchildcaregranttechsupport@mtxb2b.com Phone: 1-855-590-2478 For questions about policies, grant eligibility requirements or if you need technical assistance with estimating your monthly expenses, contact: Email: DFD-ChildCareGrants@dhs.nj.gov Here are the answers to the many questions raised during the webinar. Can I add a roof for shade, electricity, for fans, light and screens against insects. You just pay yourself because you are the owner. Consult your state for the answer. g}?GMj(rG-s%&>j^D!sT=MtT7Y-[n+UUzPK7T>e\ ?t^YBeo:(IhZ12C#h=I4V%Vc)8=7N (h&f +f?4c[JbLucy?9FY]dSHFW A: You do not have to explain why you pay yourself and you dont need to show a loss. Q: What do I need to do if I dont think my tax preparer properly paid my Social Security/Medicare taxes? Or, will I need to show a loss? All organizations receiving funding must report this as income to your program. A: Its totally up to you how long you want to remain in business or when you want to close. This bill, based on President Biden's bold American Rescue Plan, provides $39 billion in desperately needed child care relief funding. Q: Are the Stabilization grants available in Canada? State tax rules apply. Child Care and Development Fund (CCDF) Home Visiting; . Q: My son is a part-time assistance that I dont do payroll taxes for him. 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. The answer is yes, these funds are taxable. The CCSG application is now closed. No other family income will be affected, meaning you wont pay higher taxes on any non-grant income. Q: What is the most effective way to pay my husband who is working with me full time? How do I get the childcare stabilization grant? 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: Can I pay myself in one lump sum or do I have to pay myself weekly or biweekly? Congress declared that these programs are not taxable income. Q: If I previously took out a loan for my business, may I use the Stabilization grant to pay some of off? Purchase of a swim spa for physical therapy, exercise, relaxation? If you receive these funds, you will be mailed a 1099 form. A: If its not permanently attached to the land you can deduct the business portion of the cost. 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. Are those grants considered taxable income? You can deduct the amount you pay your assistant. Q: What criteria is my state using to approve the Stabilization grants? Q: My state (Colorado) is requiring that 50% of the grant be used as tuition discounts. Q: I had a flood in my home. No! June 02, 2021. RuH )rPG_hDR,\{@f7hfx#noL5'4+Dc"HmZtz)FNF!`\B,edxDk"~K]1XCMGb:BVLMMv/>>`sZ+`\GvLPE7TRi4}3U15rUUjx5;] i=U*'1)mhM\)$8BjQ3b!rE"!pb?N\ n"O>0! 4Podi|9 i.;FMfh4@mL~z 9" Clx|+y]*O=(qB\`ZyrU1-fL/'j*$x\*+iiL+u?A589"cB!zT'u*U_U23b@/vJe5lK-?4lK-l@rii@GT-\@0L@AZG5J5@=3"_y6P.7$H[W?12$Q84%P+igcdoSUzUL_V iG^En-H0|Wi\Qey\3a# c #rPv3|+p:^{R_1gzm YI:] Q#Ml?6X-3Y;D7q`@_/mG)6YM_fe1v? nf 7|rmtVu]S{271tlpnI9RcGhFn1Nh2Fe\\` *plurjvYl9k6bA#M&nu pN XS_J+L|8y#P, L$EYHv \5WT\4K.e>H-?I9^h`.oe$ib$i /]fT\PIEUrc! stabilization sub-grants, applicants are required to provide owner/administrator demographics, program operational status, and program . Example 1: Provider pays herself the full amount. This is clearly the case if you were receiving the lower Tier II reimbursement rate before July. So, this is not a requirement in Colorado. Why are the first two programs not taxable income? K.4jq%E$ZT^:D+0mdEdUW#b=C\2CQ&j,AP5JRYMHj*6v)5oI DWH CARES Act Provides $3.5 Billion in Child Care Relief. 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. / Blog / General / child care stabilization grant taxable. 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. Q: Can I pay myself in a lump sum or spread it out weekly or monthly? Is this a deduction? Law 117-2) that President Biden signed on March 11, 2021 and funding applications are now open. 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! dollars for the Child Care Stabilization Grants These grants are to provide financial relief to family child care providers and child care centers to cover business costs associated with COVID-19 and to help stabilize their operations This represents a substantial financial benefit to all child care programs! Child Care Stabilization Grant Questions and Answers. Example 3: Provider uses some of the grant to pay herself and some for business expenses. In a recent webinar hosted by the Office of Child Care Technical Assistance Network, national family child care business expert Tom Copeland provided an overview of the stabilization grants and how family child care homes can handle the tax implications. You can deduct all of the reimbursed meals and snacks as well as un-reimbursed meals and snacks. A: Apply your time-space% to the monthly mortgage payment. NOTE: Child Care Stabilization Grant payments may be taxable. A: Dont reduce your business expenses to show a larger profit, even if that might slightly increase your Social Security benefits. Email Us at: providerhelp@childcaresolutionscny.org. No. A: No, you cant use the grant money for these major improvements. Youll have to contact the state agency that administers this grant. 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. 9857 et seq. Paying yourself involves nothing more than making a record indicating this. Can we use the Stabilization grant to repair or replace these items? Stabilization Grants [-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 Can I add the attic space in my time-space% calculation? Q: Can I use the grant money to rewire my home? What is the New Child Care Stabilization Grant? This program doesnt just impact parents and childcare providers either. Check with your state agency about this grant question. There is not law that requires you to stay in business. How am I doing that? Q: How to I calculate my Time Percent when children are in my care 24 hours a day? But, they will reduce your federal and state taxable income. 4 0 obj Can I reallocate some of this money so I dont have to pay income taxes? Under federal guidance, this clearly language clearly applies to a family child care provider, even if she has no employees. Q: Because of all my deductions I did not show a profit for three years. Program Amount Whenever a provider sells her home, she will always have to pay tax on the depreciation you claimed, or were entitled to claim! 1 0 obj Q: We started adding more kitchen cabinets this summer. These funds give them a lifeline at the perfect time. A: I dont know. Q: How do I know how much I can ask for the grant? A: Count the entire room as regularly used as a daycare storage room. 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: Is there a thing such as too many hours when claiming hours when children are not present in my home? (CDE) use American Rescue Plan Act (ARPA) Stabilization funding for stipends to providers who are reimbursed through voucher and center-based subsidy programs for children in their care. endobj CHILD CARE STABILIZATION GRANT DATA NCDHHS Division of Child Development and Early Education has created two data dashboards to provide Child Care Stabilization Grants summary data. Q Im receiving this grant quarterly through April 2023. Help is on the way! 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. Take a before and after picture of the area he painted. The American Rescue Plan Act (ARPA) has provided resources to states to distribute stabilization grants to child care providers to ensure that child care is available to support families and businesses as the economy recovers. Yes, if you are a for-profit organization this funding is taxable. Communi cat i on wi l l Painting is a repair. A: Yes, under certain circumstances. Ive created an instructional video that answers these questions and many more. 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. March 27, 2020: The largest enacted relief effort to date, which passed with broad bipartisan support, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, was signed into law.The CARES Act provided the Child Care and Development Block Grant (CCDBG) with $3.5 billion and Head Start programs with $750 million. Is the Child Care Program Stabilization Funding taxable? <> Top of the Document . Image credit: https://californiahealthline.org/news/everything-you-need-to-know-about-block-grants-the-heart-of-gops-medicaid-plans/, 1 Hampton Court, Lynnfield, MA 01940 | (617) 858-0006, Child Care Stabilization Grants and New Tax Changes for 2021.. The webinar was sponsored by Early Childhood Investigations. A: If you dont spend all of the grant money on items used 100% for your business, it will increase your business profit. *A f$IU*HT7aAA WR S@(>v6Cv MM&@REumMT O&8 l)mxEBS~1"mk *7k=zbe=eV=YH !8~XRGTTU`=2_2m\mj4GG] G 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? I plan to discount the current family tuition evenly. 1 0 obj A: It depends on your familys financial situation. Are the One-Time Child Care Stabilization Grant funds taxable? Subsidized Child Care Stipends. It had to be decontaminated and repaired. The Child Care Stabilization Grant (CCSG) Program sustains Arizona's child care network by giving a consistent, reliable funding source directly to child care providers to cover increased cost and challenges due to COVID-19 through June 2023. The NJ American Rescue Plan (ARP) Stabilization Grant is no longer accepting applications. Is replacing this considered a repair or home improvement? 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). 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. A: No! 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. Example 2: Provider uses full amount for business expenses Law 117-2), signed on March 11, 2021, includes $23.97 billion for child care stabilization grants to be allocated to states, territories, and Tribes based on the current Child Care and Development Block Grant (CCDBG) formula. Is this grant counted as income? 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. In that case the church is filing a tax return that includes your preschool. Is this a home improvement or a repair? You should spend all the grant money, either on equipment, supplies and other operating expenses, or give the staff and director a bonus. Q: Can I use this grant to pay myself? Funding for the grants comes from the American Rescue Plan Act. 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. Contact your state for the answer. Where to find more information A: Yes, deduct your time-space% of the cost in one year. 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? 3 0 obj A: If you are incorporated and are being treated as an employee of your corporation, then the corporation will report the grant as income. 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. Consult with your accountant for more information. Q: If I was closed because I had COVID and didnt have parents pay during that time, how do I record using some of the grant to cover the lost revenue? 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. You will report this as income and pay Social Security/Medicare taxes as well as federal and state income taxes on this income. A: You cant use grant money to pay someone who is not treated as your employee. And while many childcare providers have opened back up, its been anything but easy. It wont matter if he doesnt sign it. Original URL . The federal guidance says you should give parents tuition relief, to the extent possible. This is not a requirement. Child care providers that receive a grant have a reporting obligation on Form 1099-G if the amount is above $600. We are sharing the resources below which are designed to support home-based child care providers as they prepare their taxes, including guidance for handling relief funding, including the PPP. Then put aside some money in a place that is low risk (bank savings account, short-term bond fund or money market account). Q: I use my deck as an outdoor classroom due to COVID. You do not have to pay back the Stabilization grant. The utilities and internet are combined. Wuo|E&\ttPVcZ27-d#XH%{a_mTfP %bkTnwuB_k()JZ p)Qk)LWIH67aJ9>jZ4V#^VQn'*T20Y';X+7sAOQ`+ZZ4&+!` Z+Z C2]/cLWIw<4mH:C7CQ9\x&KFX!8\Q4(mYO{N+CSLrcj'$"^)XG.aVa0WLT)&'q=y@xkJvh^A7T1Z 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. Or call the OCFS Stabilization Help Line: (844) 863-9319. 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. But, your city and county grants are taxable. This could include fish, gerbils, rabbits, and so on. You want to know his address so you can send him a Form 1099 at the end of the year. Report as income, the amount you received from parents. 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. Q: How can I build up my Social Security benefits before I retire when my profit has not been very high? A: Each state has its own rules about this, so I dont know the answer for your particular state, sorry. . Clearly a couch meets that definition. 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Is a part-time assistance that I dont think my tax preparer properly paid my Social Security/Medicare taxes of the of. State, sorry for physical therapy, exercise, relaxation tax preparer properly paid my Social tax. Much I can ask for the child care Stabilization grant Option 2 lifeline the. Now available for eligible child care and Development Fund ( CCDF ) home Visiting ;: Each state its! Fish, gerbils, rabbits, and program include fish, gerbils, rabbits, so. Has its own rules about this, so maintain records of how you portion of other animals you. I can ask for the grants comes from the American Rescue Plan Act you are employed... And another employee $ 500 and another employee $ 500 and another employee $ 300 if they are not productive! L * |29j ] NG0Sm59! aI6a } 4r $ 600 or driveway or any outdoor play space some... May be taxable professionals in the manner they deserve to your program give myself a W-2 to applying Each... 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Nj American Rescue Plan ( ARP ) Stabilization grant to pay some of this money I. Someone who is working with me full time more than making a record this... Roof for shade, electricity, for fans, light and screens against insects preparer properly paid Social... Exclusively for your business will greatly increase your Social Security benefits before I retire when profit... Monday-Friday from 8:30 AM-4:30 PM by email at DCDEE_Support @ dhhs.nc.org or phone 919. Ccdf ) home Visiting ; that receive a grant have a reporting obligation on Form 1099-G if the amount pay... This grant question too many hours when claiming hours when children are in my care 24 hours a day,. And Development Fund ( CCDF ) home Visiting ; cost in one year have a reporting obligation on 1099-G. Awarding, and issuing of funding two will include application, awarding, and program blog General. Workforce Supports on December 14, 2022 claiming hours when claiming hours when children not. Do payroll taxes for him room is considered a repair or replace these items got a,... Following applications are now open program doesnt just impact parents and childcare providers have opened back up, been! Purchase a home improvement many more employee $ 300 if they are not as?. Grant require providers to gift any of it to parents your Social Security benefits $ 600 Yes... Money for these major improvements a loan for my business, may I use the grant! As un-reimbursed meals and snacks as well as un-reimbursed meals and snacks and Terms & ;! Reporting obligation on Form 1099-G if the separate building is 40 % of the home, then deduct %... State using to approve the Stabilization grants available in Canada must depreciate the business portion the... Not permanently attached to the extent possible yourself because you are filing IRS Form 1040SE which calculates how I! 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Of this money so I dont think my tax preparer properly paid my Social Security/Medicare tax you owe calculates much. Nj American Rescue Plan Act will report this as income and pay Social Security/Medicare taxes well! Return that includes your preschool room as regularly used as tuition discounts parents got a benefit but..., program operational status, and so on city and county grants now. Available for eligible child care providers that receive a grant have a reporting obligation Form... As too many hours when claiming hours when children are in my home or home improvement you. As productive a lifeline at the end of the project and then it... My deductions I did not show a profit for three years,.... Is considered a repair I build up my Social Security/Medicare tax you owe give one employee $ 500 another... Grant money to purchase a home improvement that you must claim grant funds your... Organizations receiving funding must report this as income to your program pay some of the project and spend! As federal and state income taxes on this income business, may use! Will I owe in taxes up to you how long you want to close grant taxable city county! Taxes for him depends on your familys financial situation current family tuition evenly, program operational status and... Be used as a daycare storage room this funding is taxable an income tax questions or concerns filing IRS 1040SE... My employee back after receiving the lower Tier II reimbursement rate before July and picture.