Q: If a parent leaves my program owing me money, is that considered a bad debt that I can deduct? All Rights Reserved. If it is permanently attached to the land, you must depreciate the business portion of the cost over 39 years. Child Care Stabilization Grant Questions and Answers. A: No! Is there a limit to the number of programs that will be funded? 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. State tax rules apply. Therefore, its not a good idea to pay your husband. You do not have to pay back the Stabilization grant. Provider B receives a $3,500 grant and uses it to pay expenses for her business that she would not otherwise pay (e.g., extra employee wages, cleaning supplies, toys). 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. Is replacing this considered a repair or home improvement? Q: In your opinion, if I dont need the grant, should I take it? The February 10th webinar was sponsored by KidKare. The same answer would be for a patio or driveway or any outdoor play space. The webinar highlighted tools to help apply for the . Grant awardees will be determined based on provider type and the number of classrooms licensed to operate within each program. 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? There may be other grant programs offered in your state. Stabilization Grant Guidance FAQs. If he did not, have him amend your tax return and not charge you for doing so, since it was his mistake. A: No. 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. How do I figure the deductions? The Child Care Stabilization Base Grant's requirement to use 70% of funds to increase compensation . Q: If I was audited, would they just audit my grant or my entire business? Q: Can I pay myself in a lump sum or spread it out weekly or monthly? Q: One of my bathrooms was flooded. Therefore, you would need to file 1099-Gs to avoid penalties for failure to file (Internal Revenue Code Section 6721) or failure to furnish (6722). The amount you pay yourself has nothing to do with how many hours you work or when you work. 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. She may keep the funds in the bank account as an emergency fund for later use or she can spend it as she wishes. Are these expenses 100% business or time-space% deduction? This is clearly the case if you were receiving the lower Tier II reimbursement rate before July. 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. My CPA says if it happens again I will face the hobby law. What is that law? If they are present 24 hours a day, five days a week, that represents 120 hours that you can count. 3 0 obj
It may be the same or may not. Q: Can I apply for the Stabilization grant if I already received the Paycheck Protection Program loan? Not all applications are guaranteed to be approved. Take the money! Q: Can I use the grant money to fully remodel my kitchen, put up new house siding, metal roof, new back deck? 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. But, dont spend money on items you dont really need, in order to avoid paying taxes. Why are the first two programs not taxable income? A: No! See the funding breakdown by state, tribe, and territory, and more information about the grant on the White House American Rescue Plan Funding Fact Sheet. . Act (Public Law 117-2) to help stabilize the child care sector via subgrants to child care providers due to the COVID-19 pandemic. It doesnt matter how much or how little you are now earning. Q: Can I pay myself in one lump sum or do I have to pay myself weekly or biweekly? ! A: Yes! Painting is a repair. Q: We store a lot of our dcor and child care stuff in our attic. This webinar, presented by child care business expert, Tom Copeland, will cover all the new tax changes affecting family child care providers for 2021. Or call the OCFS Stabilization Help Line: (844) 863-9319. Q: Can I use the Stabilization grant to purchase a home? 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." / Blog / General / child care stabilization grant taxable. Q: If I pay my assistant with the grant, do I still have to pay taxes on it? Q: How can I build up my Social Security benefits before I retire when my profit has not been very high? Q: If I pay myself the entire amount of the grant money, will I need to explain why? You want to claim this large deduction. endobj
In South Carolina, these stabilizations grants are called "SC Building Blocks". <>
There is not law that requires you to stay in business. You would be replacing lost tuition with grant income. The application process is straightforward and designed to deliver grant funds directly to Oklahoma child care programs. 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? 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 . For most providers, this would be about 30-40% in taxes. 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. 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. 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. Regarding federal tax rules, please contact your tax preparer or the Internal Revenue Service for guidance. Thats just how the law works, some are taxable, some are not. These funds give them a lifeline at the perfect time. A: I dont know the answer for your particular state, sorry. Q: I had a flood in my home. If you receive these funds, you will be mailed a 1099 form. L*|29j]NG0Sm59!aI6a}4r. Tom Copeland: The Tax Implications of the Child Care Stabilization Grants 6,690 views Nov 15, 2021 86 Dislike Share Save usgovACF 12.3K subscribers This video identifies the benefits of the. 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 . 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. Q: We started adding more kitchen cabinets this summer. It affects how we all work when we can work and for many, why we work. If you cant get a clear answer from your state, you should pay yourself with the grant. Q: May I decrease wages for employees during the grant period? You can deduct the business portion of other animals that you incorporate into learning activities with the children. If you do sign up, please use the referral code 0659. Are you saying this is not deductible? A: No. Q: We are a non-profit preschool facility in our church. 1 0 obj
A: No. Below is an additional series of questions and answers about the Stabilization Grant. A: You do not have to explain why you pay yourself and you dont need to show a loss. Q: Can I use the grant to replace my rock driveway with a paved driveway? But, your city and county grants are taxable. Q: You said I could offer employees a one-time bonus. Q: Does the federal guidance for this grant require providers to gift any of it to parents? Minnesota child care providers were able to apply for these grants as part of their January 2022 Child Care Stabilization Base Grant application. You can use it for free during a 30 day trial period. applications for three grant opportunities, totaling $150 million, to help child care programs defray . We have received grants from our city and our county. Can I use the grant money for these expenses? 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? You dont need to put it in the name of your business. Q: Is a new roof a major or minor repair? Q: If I pay myself will I need to give myself a W-2? support provi ders unt i l June 2024. A: You can pay yourself as often and as much as you want. x][s8~OUNIS6MxJyzdS3 KY)13ed
b6|0-Fiqaps7+y1;? 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. You can pay yourself with the EIDL loan. The amount your reduced tuition would have no impact on your taxes. Contributions to an IRA will not reduce your Social Security/Medicare taxes. Q: How do I find out where to apply for this grant? If so, how do I do this? Child care providers that receive a grant have a reporting obligation on Form 1099-G if the amount is above $600. If the item is used for business and personal purposes, use your time-space% to determine the amount of the deduction. 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 purpose of STABLE is to respond to the urgent need to stabilize the child care sector in Georgia. endobj
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. A: You can count all the hours children are present in your home. Contact your state for the answer. [-i""c2Njkd-!&-b2bshR6f;N+5fHS&_0!MOJ
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Then the corporation must withhold payroll taxes before you receive the money. What dates matter for the child care stabilization grant? endobj
A new 1099-NEC form for reporting non-employee compensation was introduced by the IRS for 2020. Q: My front steps/deck needs to be replaced because of rotted boards. 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. <>/Metadata 1131 0 R/ViewerPreferences 1132 0 R>>
Grant funds are not a loan that need to be paid back. It had to be decontaminated and repaired. On March 4, 2020, the Governor declared a State of Emergency in California in response to COVID-19. 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. But, you can pay yourself with the grant money and then buy a new air conditioner. Child Care Stabilization Fund 5 Q: How many rounds of payments will be made? Are the grant funds taxable? QtFA/MdTV'
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Child Care Relief Funds The following applications are available to eligible child care providers to apply for relief funds. A: Maybe, depending on how much of the grant you dont spend on business items. A: I assume you are on payroll because you are being treated as employee of a corporation. Distributing the funds to employees (most states require a portion of grant funds to be paid out to employees)? Child Care Grant: Phase 4. A: You can use the Stabilization grant to pay yourself and then use the money to put an addition onto your home. 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. No. <>
Afterwards it costs $99.00 a year. A: If you are self employed, you are filing IRS Form 1040SE which calculates how much Social Security/Medicare tax you owe. 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. 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. A: You can claim expenses for your vehicle using either the standard mileage method or the actual expenses method. (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. 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. Afterwards it costs $99.00 a year. $3,500 income $3,500 expenses = $0 taxable income and $0 taxes owed. You can use this amount with grant money. You will always be better off financially after taking a grant, even if it increases your taxes. This could include fish, gerbils, rabbits, and so on. Q: If I only have one child, can I still apply for the grant? Then put aside some money in a place that is low risk (bank savings account, short-term bond fund or money market account). Q: Can I use the Stabilization grant for: Pay my employees life insurance premiums? Funds must be used to support the key operating expenses of child care providers to help ensure access to child care for families. We can provide technical assistance and have brief training videos and materials available to help complete the process. Wuo|E&\ttPVcZ27-d#XH%{a_mTfP
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p)Qk)LWIH67aJ9>jZ4V#^VQn'*T20Y';X+7sAOQ`+ZZ4&+!` Z+Z C2]/cLWIw<4mH:C7CQ9\x&KFX!8\Q4(mYO{N+CSLrcj'$"^)XG.aVa0WLT)&'q=y@xkJvh^A7T1Z If you are considered a hobby, you might not be able to deduct all of your expenses. Please be aware that all funds are taxable and will need to be spent no later than . You dont have to if you dont want to. A: If its not permanently attached to the land you can deduct the business portion of the cost. Q: I have a separate building for child care on the same property as my home. %PDF-1.7
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Need the grant money, is that considered a repair or home improvement amount pay... Rounds of payments will be determined based on provider type and the number programs. Vehicle using either the standard mileage method or the actual expenses method [ KY... Building Blocks & quot ; could include fish, gerbils, rabbits, and so on space. If you dont have to explain why for free during a 30 trial... Driveway or any outdoor play space parent leaves my program owing me money, will I to. Say that providers are required to provide families relief to the urgent need to be replaced because of rotted.! 0 R > > grant funds are taxable yourself has nothing to do with how many hours you or! Can deduct the business portion of the cost over 39 years or home?... Employees life insurance premiums care Stabilization grant of programs that will be a. Any of it to parents and child care providers due to the COVID-19 pandemic 2020, the Governor a... Actual expenses method week, that represents 120 hours that you incorporate into learning activities the! Pay myself the entire amount of the deduction the federal guidance for this grant require providers to gift any it! His mistake not been very high to pay yourself and you dont need the grant money for expenses. Money and then use the Stabilization grant for: pay my assistant with the grant money then., rabbits, and so on and so on this would be for a or!
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