You dont have to if you dont want to. 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. Take the money! A: I am sorry to hear this. A: You can use the Stabilization grant to pay yourself and then use the money to put an addition onto your home. Outdoor space is not considered part of the square footage of your home. Should we spend everything that we receive with the grant? Registered family child care providers are eligible for $4,000 in grants. On July 23, 2021, the Legislature enacted the Child Care and Development Infrastructure Grant Program, detailed in Welfare and Institutions Code section 10310., a $250 million investment in the child care infrastructure across the State of California that is to be administered in the form of grants by the California Department of Social . Q Im receiving this grant quarterly through April 2023. Q: Do we need to enter into KidKare if I am paying myself? A: You cannot deduct any costs associated with a dog or cat. A: No. A: If you dont spend all of the grant money on items used 100% for your business, it will increase your business profit. 2 0 obj The Child Care Stabilization Grant is considered income and is taxable. 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. On March 4, 2020, the Governor declared a State of Emergency in California in response to COVID-19. Child Care Stabilization Funding DECAL recognizes the critical role that child care plays in supporting children, families, businesses, and the economy as a whole. The Child Care Stabilization Grant is income to your business and is taxable by the state and federal government. 1099, W-2? Workforce Innovation Sustain Child Care Subsidy Operations Start-up & Expansion Paycheck Protection Retention of Child Care Staff No. Keep enough records to show that children are present 24 hours. You may use grant funds to pay for an accountant or financial advisor. 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? A: You report the grant as income. Is the Child Care Program Stabilization Funding taxable? The application process and distribution structure varies from state to state, so check your local government website to confirm application deadlines and important dates. Q: Can I give different amounts of a bonus to my employees? OCFS Check with your state agency about this grant question. If you do sign up, please use the referral code 0659. Painting is a repair. 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. 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. child care, child and adult protective services, adoption, and child support services. Can I use the grant money for these expenses? These funds have reached over 12,000 child care providers across the state, including child care centers and family child care homes, as well as bonuses for early childhood professionals. A: You can pay yourself with part or all of the grant money. 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 Help is on the way! Grant awardees will be determined based on provider type and the number of classrooms licensed to operate within each program. Q: Is money I received from the Stabilization grant taxable income? Q: My business is an S Corporation. The NJ American Rescue Plan (ARP) Stabilization Grant is no longer accepting applications. . A: You wont have to ask. The Child Care Stabilization Base Grant's requirement to use 70% of funds to increase compensation . And while many childcare providers have opened back up, its been anything but easy. For example, can I give one employee $500 and another employee $300 if they are not as productive? The amount you pay yourself has nothing to do with how many hours you work or when you work. Replace worn out bedroom carpet and hallway with wood floors? <>/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 lower level is strictly daycare, but the rest of the house is used by all day by the children. Each state has its own guidelinescheck your local government website to confirm: Who is eligible and how to apply for the grant. Operational Grant Formula Updated. Investing in Iowa's Child Care (IICC) Funding Program The second child care stabilization grant was released on July 5, 2022. Q: We store a lot of our dcor and child care stuff in our attic. 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. Q: How do I pay myself if I did not lose children during COVID, and how do I calculate it? The IRS has published information indicating that "receipt of a government grant by a business is generally not excluded from the business's gross income under the Federal Tax Code and therefore is taxable." Can we use the Stabilization grant to repair or replace these items? 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. Are these expenses tax deductible? A: No. Q: If I previously took out a loan for my business, may I use the Stabilization grant to pay some of off? COVID-19 Child Care Stabilization and Recovery Grants. 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. Almost. You can treat this as a repair and deduct your time-space% of this cost in one year. 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: I have been closed all year because of COVID and health issues that put me at high risk. Q: Can I use the grant to landscape my backyard to build a play set for the daycare? 4 0 obj The Child Care Stabilization Grant consists of: Program Amount + Workforce Amount + Add-Ons DCYF will use licensed capacity data to calculate a program amount and a workforce amount . Subsidized Child Care Stipends. You can deduct the business portion of other animals that you incorporate into learning activities with the children. A: You should absolutely take it. If he did not, have him amend your tax return and not charge you for doing so, since it was his mistake. 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%? Phase three will include the closeout process for these funds. NOTE: Child Care Stabilization Grant payments may be taxable. No. The National Center on Early Childhood Quality Assurance and its partners at First Children's Finance shared information about the stabilization grants coming to states, territories, and Tribes. Q: What impact will receiving this grant have on my Social Security benefits? A: I dont know. You want to claim this large deduction. 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.. Are these expenses 100% business or time-space% deduction? Q: I gifted some of the grant back to parents because of COVID. Each state will determine how much a provider will receive based on a criteria they have developed. We have received grants from our city and our county. If its only used by your business, you can deduct 100% of the cost in one year. Q: If I only have one child, can I still apply for the grant? Keep in mind that all of these funds are taxable, so maintain records of how you . Supporting Family Child Care to Prepare for Child Care Stabilization Grants If you are considered a hobby, you might not be able to deduct all of your expenses. 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. A: State applications will often use the word personnel when describing what the grant can be used for. ?y-|G1H3/_|/I'>_|!P,0ZE2:PTon_h Example 1: Provider pays herself the full amount. <> A: Assuming the money you spend on items for your business are used exclusively for your business, the tax consequences are the same as paying yourself. Therefore, my answers below may not be the same answers your state gives you. 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. 9EJH-E*!PPRs&-L\1%gh7XXjZ/ Q: Can I use the Stabilization grant to purchase a home? Do any repairs count as an expense for my vehicle? Example 2: Provider uses full amount for business expenses Q: I need a new washer, dryer and water heater. Here are the government resources for the Child Care Stabilization Grant by state: The Child Care Stabilization Grant is part of the American Rescue Plan Act (ARP Act) (Pub. If you just replaced the shingles this would probably be considered a minor repair. 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. stream You would report $5,000 as income and $2,000 as an expense, and end up paying taxes on the difference, or $3,000. But, they will reduce your federal and state taxable income. A: No, you cant use the grant money for these major improvements. 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. 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. A conservative estimate would be to assume 15 percent for social security/Medicare plus 15 percent federal income tax and about 10 percent for state and local income tax, for a total of 40 percent or $1,400. Q: My state (Colorado) is requiring that 50% of the grant be used as tuition discounts. A: You can apply some of the grant money to cover lost revenue, but you cant deduct lost revenue as a business expense. 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. KidKare is a comprehensive record keeping program that includes an accounting section that allows you to keep track of all your income and expenses. Q: My front steps/deck needs to be replaced because of rotted boards. The Department of Children and Families (DCF) has allocated $351 million in funds for the Child Care Counts: Stabilization Payment Program to support Wisconsin's early care and education community. Can I still use the standard meal allowance rate or must they use the actual expense method? But, you can pay yourself first and then use the money for these items. Contact your state for the answer. A: Yes! Q: One of my bathrooms was flooded. around the country, mostly small businesses, who were already operating on thin margins. Q: I bought flowers for the front yard and new patio blocks leading to the front door. Are the One-Time Child Care Stabilization Grant funds taxable? Consult your state for the answer. A: You cannot use the Stabilization grant to pay off a previous loan. Child Care Relief Funding 2022. Adhering to your states unique spending and reporting requirements for funds that are part of the grant through the Office of Child Care. Q: Can I call my employee back after receiving the grant, even if I only have two children in care? Paying for weekly house cleaner? Q: I am on the Food Program and I spent $100 a month for food, but am only paid $68 from the Food Program. 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. Q: How are my wages reported to Social Security? The NJ ARP Stabilization Grants range from $30,000 to $120,000 for licensed child care centers, depending on license capacity, provider type and monthly expenses. Q: Has the standard meal allowance rules always been in place or is this a recent rule? Is the grant taxable income? We can provide technical assistance and have brief training videos and materials available to help complete the process. 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. Q: Can I pay myself any amount? Is the child care stabilization grant taxable? Therefore, its not a good idea to pay your husband. A: Depends on what your state says. You can choose which method to use each year. Then put aside some money in a place that is low risk (bank savings account, short-term bond fund or money market account). This is unsustainable for many reasons. Q: If I use the grant for my IRA, can I deduct 100% of this on my taxes? Our goal is to help your program become financially secure. Youll have to contact Social Security directly. A: Only if you already have a post-secondary degree. Q: Can I claim Social Security on my ex-husband? You can always deduct any expense that is ordinary and necessary for your business. I thought it was seven years. Q: We started adding more kitchen cabinets this summer. QtFA/MdTV' +` _-gNT_eS?o9u"V)p y[7 A: RI DHS aims to approve two stipends to all eligible providers, depending upon fund availability. A: No. The government has taken notice, and their answer is The Child Care Stabilization Grant, part of the American Rescue Plan Act (ARPA). 9857 et seq. A: Its a repair because you didnt remodel the entire kitchen by replacing just the cabinets. A: No. See the funding breakdown by state, tribe, and territory, and more information about the grant on the. Will we have to file a tax return? Yes. 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. You will report less income in this situation, but you cant deduct anything that a parent owes you. Q: Because of all my deductions I did not show a profit for three years. It doesnt matter if you havent lost any children. This funding is subject to the same tax rules as regular CCDF funding. Yes, if you are a for-profit organization this funding is taxable. This is clearly the case if you were receiving the lower Tier II reimbursement rate before July. Providers who received funding during the first round must complete an expenditure report before . 2023 BUILD Initiative. You should spend all the grant money, either on equipment, supplies and other operating expenses, or give the staff and director a bonus. You can use the grant money to pay yourself and then pay off the loan. Q: Is the Economic Injury Disaster Loan (EIDL) a Stabilization grant or is this a loan that must be repaid? If it is permanently attached to the land, you must depreciate the business portion of the cost over 39 years. Funds are in place so every eligible program can receive one grant per facility/site. Supporting Family Child Care to Prepare for Child Care Stabilization Grants, Help is on the way! A: No! Does that mean I cannot offer a monthly or quarterly bonus? Funding for the grants comes from the American Rescue Plan Act. How long do I have to stay in business if I receive stabilization grant funding? Once you apply, you will be told how much you will get. A: All non-profits should be filing a tax return, unless your preschool is owned by the children. Q: On one slide it says that the PPP and EIDL programs are not taxable income. 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? A: It depends on your familys financial situation. The Stabilization Payment Program Round 2 is a nine-month payment program that runs August 2022 through April 2023. / Blog / General / child care stabilization grant taxable. Should I pay myself first with the grant money and then make payments on the vehicle? 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. <>/Metadata 1131 0 R/ViewerPreferences 1132 0 R>> If he did, then you properly paid your Social Security/Medicare taxes. Are you saying this is not deductible? Supporting Centers in Preparing for Child Care Stabilization Grants What does that do to my time-space%? No! Take a before and after picture of the area he painted. A: EIDL is not the Stabilization grant. 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. I feel like its just more income I have to claim and pay taxes on. 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. Beginning November 1, 2021, DHS will be using American Rescue Plan Act (ARPA) funding to increase the number of monthly absent days for the Child Care Assistance (CCA) program from 4 to 6. You must report as income the reimbursements you received from the Food Program, with the exception that any reimbursements for your own children are not income. You can pay yourself with the EIDL loan. Are the grant funds taxable? If you are a sole proprietor (self employed), you do not take out payroll taxes before paying yourself. Although your chances of being audited are very remote, even in your situation, it is good advice to try to show at least a small profit three out of every five years. Or call the OCFS Stabilization Help Line: (844) 863-9319. Even if I didnt get Form 1099? This income will not be the same as your food expenses. All programs will receive a 1099 for grant funds received. A: Since these expenses are used by both your business and your family, apply your time-space% to these expenses. Subject: Child Care Stabilization Grants Appropriated in the American Rescue Plan (ARP) Act (Public Law 117-2) signed into law on March 11, 2021. Programs that are awarded a grant will receive an IRS Tax Form 1099-NEC. A: If you are self employed, you are filing IRS Form 1040SE which calculates how much Social Security/Medicare tax you owe. Must be repaid territory, and Child support services PPRs & -L\1 % gh7XXjZ/ q: is money received. You were receiving the lower Tier II reimbursement rate before July state has its own guidelinescheck your local government to! Be told how much Social Security/Medicare tax you owe same tax rules as regular funding. 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