If youre a daycare or childcare provider, read on to find all of the important program details. Report as income, the amount you received from parents. NOTE: Child Care Stabilization Grant payments may be taxable. Q: Can I call my employee back after receiving the grant, even if I only have two children in care? Once you apply, you will be told how much you will get. Funds are in place so every eligible program can receive one grant per facility/site. x][s8~OUNIS6MxJyzdS3 KY)13ed b6|0-Fiqaps7+y1;? endobj If you did give parents a discount, the amount you gave as a discount is not a business expense. You will owe 15.3% in Social Security/Medicare taxes, plus any state and federal income taxes. 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? Q: I use my deck as an outdoor classroom due to COVID. A: You can count all hours that you work in your home, either caring for children or doing other business activities. Funding for the grants comes from the American Rescue Plan Act. If you dont spend it all you will have to return the unspent money. %PDF-1.7 Q: I am on the Food Program and I spent $100 a month for food, but am only paid $68 from the Food Program. In this blog, Damaris Alvarado-Rodriguez explains the strategies she uses to compensate ECE professionals in the manner they deserve. 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: Since these expenses are used by both your business and your family, apply your time-space% to these expenses. Child Care Stabilization Grants The American Rescue Plan Act of 2021 (ARP Act) (Pub. On another slide it says that state grants are taxable income. The plan includes $24 billion in child care stabilization grant funding for states, territories, and tribes to distribute within their state using the Child Care and Development Grant (CCDBG) formula. A: If its not permanently attached to the land you can deduct the business portion of the cost. If you are considered a hobby, you might not be able to deduct all of your expenses. When childcare providers struggle, this creates a ripple effect in the economy when families cant get childcare. A: Each state has its own rules about this. r}#llQU]giI@ EvO8hwdm49IOr0&5C{A+C uL0PL CivWqU,E,cunk~q.c8XJ89pXS}slO++1*wZQI Did this change? It may be the same or may not. Claim this as a house repair on Form 8829. T he new mont hl y grant amount and pol i cy i s i n process and under revi ew. Help is on the way! Distribution date Deadline; Cohort 1: (Center (100+) October 5, 2021 : October 18, 2021 at 11:59 p.m. CT: Cohort 2: Center (76-100) . Wuo|E&\ttPVcZ27-d#XH%{a_mTfP %bkTnwuB_k()JZ p)Qk)LWIH67aJ9>jZ4V#^VQn'*T20Y';X+7sAOQ`+ZZ4&+!` Z+Z C2]/cLWIw<4mH:C7CQ9\x&KFX!8\Q4(mYO{N+CSLrcj'$"^)XG.aVa0WLT)&'q=y@xkJvh^A7T1Z Contribute to a SEP IRA or Roth IRA? Can I give him a $500 bonus? JaJJ+7@h&P8=?xv:jA!tOUa@J]uym@%|4YX2 |[:&= 3q;n#}Ab!72d KNOgl0q8\l0'dP!_"g8X`G6"%Wi{nP"D\-;@Oi1)+fd- JE~_X\}[.qpaidP^^C5B-qOu K=(~S`!b]Rfy(-cp1PC:t)4zPSq &A##807[uCo3./kECuzS:zRsu[G q>+hL For all of the above answers that were No, you can still pay yourself and then use the money for these purposes. Or call the OCFS Stabilization Help Line: (844) 863-9319. Is this correct? 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%? You can pay yourself and then give him a bonus. Q: Does going back to college count as hours? Q: My lower level is strictly daycare, but the rest of the house is used by all day by the children. My CPA says if it happens again I will face the hobby law. What is that law? 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.. Q: May I use the standard meal allowance rate to claim food expenses for an employee that eats food while working in my home? Paying yourself involves nothing more than making a record indicating this. Child Care and Development Fund (CCDF) Home Visiting; . 4 0 obj 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? Q: Can I get the grant even if I dont have any helpers? Important note: Although there is federal guidance on how the Stabilization grants are to be administered, each state may interpret this guidance slightly differently. Can I put it on my 2021 tax return? The corporation can deduct your wages and payroll taxes. You cant count repairs if you use the standard mileage method, but you can count repairs if you use the actual expenses method. around the country, mostly small businesses, who were already operating on thin margins. If he did not, have him amend your tax return and not charge you for doing so, since it was his mistake. stream If you cant get a clear answer from your state, you should pay yourself with the grant. Check with your state agency about this grant question. 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. A: All non-profits should be filing a tax return, unless your preschool is owned by the children. p Operational Grant Formula Updated. A: Yes. Q: I had a flood in my home. Q: I did not include the grant I got in 2020 on my 2020 tax return. Can I add the attic space in my time-space% calculation? 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. Can I still use the standard meal allowance rate or must they use the actual expense method? 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 choose which method to use each year. 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? If you are a sole proprietor (self employed), you do not take out payroll taxes before paying yourself. Q: Can we pay ourselves in 2022 with grant money from 2021? The second child care stabilization grant was released on July 5, 2022. Q: Can I use the Stabilization grant to purchase a home? Q: My son is a part-time assistance that I dont do payroll taxes for him. A: It will depend on your personal finances. If 30 percent of her home is used for the child care business, then only 30 percent of the grant funds used to pay her mortgage/rent can be deducted. oRT@ 66V'aNAS\u8g<05!rzf7M- (bw1RK51 wOffHg]tJ}%NaiIrIV.y3*2w@LIGFIm(IsMv 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. Are the C3 Child Care Stabilization grants taxable? Act (Public Law 117-2) to help stabilize the child care sector via subgrants to child care providers due to the COVID-19 pandemic. Before the pandemic, there were approximately 675,000 childcare providers around the country, mostly small businesses, who were already operating on thin margins. In response to the COVID-19 public health emergency and its impact on the child care industry, President Biden signed the American Rescue Plan Act of 2021 (ARP Act). Contact your state for the answer. Well answer: One of the most common questions about this federal relief program is "how much is the 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. Contributions to an IRA will not reduce your Social Security/Medicare taxes. A: I dont know if you state would consider this a major improvement or not. % A: Some states have different rules about this. A: You can use the grant money directly for these expenses. 721 Smith Rd. Consult your state for the answer. Painting is a repair. Q: If I pay a neighbor to paint my daycare with cash, how can I record this as an expense? s,[[1c!yOOH-Nr Q: My state (Colorado) is requiring that 50% of the grant be used as tuition discounts. You must recalculate your time-space% each year. Instead, start making contributions to your IRA. How do I get the childcare 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. Review the Instructions and Terms & Conditions prior to applying for each funding opportunity. Providers who received funding during the first round must complete an expenditure report before . Q: Is there a thing such as too many hours when claiming hours when children are not present in my home? Q: Is the Economic Injury Disaster Loan (EIDL) a Stabilization grant or is this a loan that must be repaid? Step 1: Submit an OK Child Care Application Step 2: OKDHS reviews the application Step 3: OKDHS approves the application Step 4: Child care program is notified of approval via email Not all applications are guaranteed to be approved. Q: If I give my staff a bonus am I doing it through payroll? 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.. 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? This webinar, presented by child care business expert, Tom Copeland, will cover all the new tax changes affecting family child care providers for 2021. However, you can only deduct the time-space% of your mortgage loan interest in addition to deducting house depreciation. Can I deduct this? Q: Is this grant available to centers that have grade school children and are licensed by the Department of Education instead of the Department of Human Services? Child care providers that receive a grant have a reporting obligation on Form 1099-G if the amount is above $600. Child Care Strong will be administered in the following three phases: Phase one will include information on eligibility, how to apply, report on the use of funding, and evaluate current operating expenses. Here are the answers to the many questions raised during the webinar. How do you determine your salary? The Child Care Stabilization Grant is income to your business and is taxable by the state and federal government. Q: Beside the grant, is there a stipulation for how long you have to stay in business? A: Its totally up to you how long you want to remain in business or when you want to close. A: No, you cant use the grant money for these major improvements. Q: Can I use the Stabilization grant for: Pay my employees life insurance premiums? 24 February 2023 . What is the SC Building Blocks Grant? endobj No other family income will be affected, meaning you wont pay higher taxes on any non-grant income. She may keep the funds in the bank account as an emergency fund for later use or she can spend it as she wishes. Q: Do I include the square footage of my garage that is not attached to my home as part of the total square feet of my home? A: You can include it either on line one (Gross receipts) or line six (Other Income). June 02, 2021. 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? If it is permanently attached to the land, you must depreciate the business portion of the cost over 39 years. Q: You said we should only save our business records for three years. A: Dont reduce your business expenses to show a larger profit, even if that might slightly increase your Social Security benefits. In this blog, Anna Mercer-Mclean details how she has utilized funding to increase salaries and benefits for her employees and her strategies to sustain providing ECE professionals their worth. Example 2: Provider uses full amount for business expenses References: The Child Care and Development Block Grant (CCDBG) Act (42 U.S.C. 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. Investing in Iowa's Child Care (IICC) Funding Program Q: Can I use the Stabilization grant to replace my old central air condition unit? 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! 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. 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. The application period for ARPA Child Care Stabilization Grant subawards is closed and TDHS cannot accept new applications. 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.

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