When childcare providers struggle, this creates a ripple effect in the economy when families cant get childcare. As long as you keep records showing you worked these hours, claim all the hours. But, dont spend money on items you dont really need, in order to avoid paying taxes. Q: May I use the standard meal allowance rate to claim food expenses for an employee that eats food while working in my home? Afterwards it costs $99.00 a year. If he did not, have him amend your tax return and not charge you for doing so, since it was his mistake. 4 0 obj You can deduct the business portion of other animals that you incorporate into learning activities with the children. Why does the child care stabilization grant matter? A: Yes, you can deduct this in one year as a repair. 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? Are these expenses 100% business or time-space% deduction? This program doesnt just impact parents and childcare providers either. 3 0 obj 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. How do I treat this on my taxes? Can I still use the standard meal allowance rate or must they use the actual expense method? 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). Purchase of a swim spa for physical therapy, exercise, relaxation? This blog explores the tax implications of the American Rescue Plan Act (ARPA) Child Care Stabilization Grants for Home-Based Child Care Providers. 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. 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. 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. It had to be decontaminated and repaired. No. If it is permanently attached to the land, you must depreciate the business portion of the cost over 39 years. 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. A: You wont have to ask. 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 government has taken notice, and their answer is The Child Care Stabilization Grant, part of the American Rescue Plan Act (ARPA). Phase 4 of the Idaho Child Care Grant provides funding for child care providers in Idaho to ensure they are able to remain open and caring for children. A: If you pay yourself with the grant and then buy items used 100% for your business, you wont owe any taxes on the amount you use the grant for this purpose. Q: Can I use the grant money to rewire my home? COVID-19 Child Care Stabilization and Recovery Grants. Q: What is the most effective way to pay my husband who is working with me full time? 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. 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 Q: My lower level is strictly daycare, but the rest of the house is used by all day by the children. If so, the corporation must pay you with the grant money through your normal payroll process which means paying payroll taxes. I had a Delaware state license by March 21st, but not OCCL license until July 2021. There has never been this amount of federal funding dedicated to childcare providers, which makes this an incredible opportunity. 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). Contributions to an IRA will not reduce your Social Security/Medicare taxes. In general, every licensed or regulated provider is eligible. child care, child and adult protective services, adoption, and child support services. Funds must be used to support the key operating expenses of child care providers to help ensure access to child care for families. Can I add a roof for shade, electricity, for fans, light and screens against insects. If so, how do I do this? You dont need to put it in the name of your business. 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. State tax rules apply. 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. 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. A: I dont know if you state would consider this a major improvement or not. Contact your state for the answer. A: You report the grant as income. A: The standard meal allowance rate has been in effect since 2003. Child Care Relief Funds The following applications are available to eligible child care providers to apply for relief funds. The amount you pay yourself has nothing to do with how many hours you work or when you work. Q: If I give my staff a bonus am I doing it through payroll? If you cant get a clear answer from your state, you should pay yourself with the grant. If they are present 24 hours a day, five days a week, that represents 120 hours that you can count. Q: I use my deck as an outdoor classroom due to COVID. This builds on critical down payments on relief . Each state will determine how much a provider will receive based on a criteria they have developed. If so, follow up with your state to make sure they are following their own rules. The answer is yes, these funds are taxable. You will probably owe no more than 40% of the grant in taxes. Will I have to pay taxes on what I am getting reimbursed 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. Is this a home improvement or a repair? 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. Or call the OCFS Stabilization Help Line: (844) 863-9319. A: You must report Food Program reimbursements as taxable income. K.4jq%E$ZT^:D+0mdEdUW#b=C\2CQ&j,AP5JRYMHj*6v)5oI DWH Is this deductible? In this case, she can deduct the business portion of these expenses by estimating the percent of time they will be used for business versus personal purposes (usually her time-space percentage). You can treat this as a repair and deduct your time-space% of this cost in one year. All Rights Reserved. A: Yes. Q: Can I pay myself in a lump sum or spread it out weekly or monthly? Q: Is money I received from the Stabilization grant taxable income? Q: Can I give different amounts of a bonus to my employees? Will we have to file a tax return? Q: How do I create an emergency fund with this grant? 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: My states guidelines say that providers are required to provide families relief to the extent possible. For example, charging less tuition to assist parents. You would be replacing lost tuition with grant income. Is the grant taxable income? %PDF-1.7 A: Yes, under certain circumstances. The parents got a benefit, but you didnt. Child care has received $54 billion since the start of the pandemic. The purpose of STABLE is to respond to the urgent need to stabilize the child care sector in Georgia. 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. oRT@ 66V'aNAS\u8g<05!rzf7M- (bw1RK51 wOffHg]tJ}%NaiIrIV.y3*2w@LIGFIm(IsMv You can use this amount with grant money. 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. This bill, based on President Biden's bold American Rescue Plan, provides $39 billion in desperately needed child care relief funding. Phase three will include the closeout process for these funds. It doesnt matter if you havent lost any children. This presents an administrative challenge for using grant funds, because if you dont do it correctly you may lose your funds. The utilities and internet are combined. This is clearly the case if you were receiving the lower Tier II reimbursement rate before July. Outdoor space is not considered part of the square footage of your home. Did this change? % 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. See how Compt can help you and your employees utilize these federal funds: Schedule a Demo: Our customers have figured out how: lifestyle spending accounts! 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. Example 1: Provider pays herself the full amount. Phase two will include application, awarding, and issuing of funding. In this blog, Damaris Alvarado-Rodriguez explains the strategies she uses to compensate ECE professionals in the manner they deserve. Program Amount Q: If I transferred money to pay myself earlier but sometimes forgot to make a note, can I go back and fix it? Get more information about KidKare. Grant awardees will be determined based on provider type and the number of classrooms licensed to operate within each program. If you are an employee, your employer is withhold Social Security/Medicare taxes and sending them on to Social Security quarterly. A: Yes, you can pay yourself any amount. Please consult your tax professional, if you have an income tax questions or concerns. The webinar highlighted tools to help apply for the . Q: Can the playground used exclusively for my business be part of the space percentage? Virginia's Child Care Stabilization Grant Program is designed to: Stabilize child care programs now; Support providers to make strategic investments in their programs; Target higher rates of support to providers located in or serving communities hit hardest by the pandemic; and Encourage participation in the Child Care Subsidy Program. / Blog / General / child care stabilization grant taxable. Below is an additional series of questions and answers about the Stabilization Grant. No. A: No! Q: Are the Stabilization grants available in Canada? 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! Q: You said I could offer employees a one-time bonus. Q: Do we need to enter into KidKare if I am paying myself? Email Us at: providerhelp@childcaresolutionscny.org. Does that mean I cannot offer a monthly or quarterly bonus? Q: If I only have one child, can I still apply for the grant? $3,500 income $3,500 expenses = $0 taxable income and $0 taxes owed. You must treat people who help you care for children as your employees, subject to all the payroll taxes. Programs that are awarded a grant will receive an IRS Tax Form 1099-NEC. A: Count the entire room as regularly used as a daycare storage room. 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. Parents and childcare providers either the lower child care stabilization grant taxable II reimbursement rate before July effect since 2003 you would replacing! Get a clear answer from your state to make sure they are their! 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