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. This means you will pay some additional Social Security taxes, but it also means your higher profit will potentially increase your Social Security benefits. Does that mean I cannot offer a monthly or quarterly bonus? A: Installing a new driveway or repairing it would both be considered a repair, not a home improvement. The application process and distribution structure varies from state to state, so check your local government website to confirm application deadlines and important dates. A: Yes, a staff bonus must go through normal payroll, which means you are withholding payroll taxes in the same way as you process wages. Can I deduct this? What does that do to my time-space%? 4 0 obj Q: If I pay myself will I need to give myself a W-2? p Q: Can I use the Stabilization grant to replace my old central air condition unit? All $20 million of the One-Time Supplemental Stabilization Grant funds was awarded in January 2022. This funding is subject to the same tax rules as regular CCDF funding. 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. Providers who received funding during the first round must complete an expenditure report before . endobj ?y-|G1H3/_|/I'>_|!P,0ZE2:PTon_h T he new mont hl y grant amount wi l l be reduced st art i ng O ct ober 1, 2023. Q: If I pay myself and then use some of the money to purchase items for my business, can I still deduct this as a business expense? 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? A: The EIDL loan is not forgivable, you must pay it back over 30 years. Is this deductible? This bill, based on President Biden's bold American Rescue Plan, provides $39 billion in desperately needed child care relief funding. 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." If the item is used for business and personal purposes, use your time-space% to determine the amount of the deduction. Q: How to I calculate my Time Percent when children are in my care 24 hours a day? Therefore, my answers below may not be the same answers your state gives you. A: I am sorry to hear this. A: Yes. A: No! ! 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. endobj If you do, the amount that you lower your tuition is not tax deductible. Whenever a provider sells her home, she will always have to pay tax on the depreciation you claimed, or were entitled to claim! 4 0 obj Q: What do I need to do if I dont think my tax preparer properly paid my Social Security/Medicare taxes? But, dont spend money on items you dont really need, in order to avoid paying taxes. 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. Q: Where does the grant go on Schedule C? Are the C3 Child Care Stabilization grants taxable? The utilities and internet are combined. Tom Copelands Blog: Taking Care of Business Consult with your accountant for more information. But, they will reduce your federal and state taxable income. No other family income will be affected, meaning you wont pay higher taxes on any non-grant income. A: I dont know if you state would consider this a major improvement or not. One extra snack per day, per child is an additional $202 deduction. Q: Are there any grants available to add on space to my home without getting a loan? How do I figure the deductions? If he did not, have him amend your tax return and not charge you for doing so, since it was his mistake. 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: If I use the grant for my IRA, can I deduct 100% of this on my taxes? You can use it for free during a 30 day trial period. A: The remodeling of a room is considered a home improvement that you must depreciate over 39 years after applying your time-space%. Can I give him a $500 bonus? When childcare providers struggle, this creates a ripple effect in the economy when families cant get childcare. It affects how we all work when we can work and for many, why we work. 24 February 2023 . Q: Is it better to pay myself with this grant or spend it on items for my business? Q: You said I could offer employees a one-time bonus. Child Care Stabilization Grants The American Rescue Plan Act of 2021 (ARP Act) (Pub. 2023 BUILD Initiative. A: Colorado says they encourage providers to give 50% to parents. No. 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? Youll have to contact Social Security directly. Q: How are my wages reported to Social Security? 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 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. A: If you dont spend all of the grant money on items used 100% for your business, it will increase your business profit. However, you can only deduct the time-space% of your mortgage loan interest in addition to deducting house depreciation. Should we spend everything that we receive with the grant? There has never been this amount of federal funding dedicated to childcare providers, which makes this an incredible opportunity. 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. After September 30, 2022, no additional CCSG awards will be made. A: Each state has its own rules about this. As we all know, parents need access to safe, quality child care to get back to work. A: Yes, deduct your time-space% of the cost in one year. 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. A: If you do child care out of your own home, you are entitled to depreciate your home. A: You can deduct your Time-Space% of your utilities. Yes. Outdoor space is not considered part of the square footage of your home. stream Q: I have remodeled my kitchen and bathrooms. Program Amount Stabilization Grant program is capped at $850,000 per site for the duration of the program. A: EIDL is not the Stabilization grant. Q: Does the federal guidance for this grant require providers to gift any of it to parents? A: No. It wont matter if he doesnt sign it. 2. Claim this as a house repair on Form 8829. Are those grants considered taxable income? Q: My state (Colorado) is requiring that 50% of the grant be used as tuition discounts. You can deduct the business portion of other animals that you incorporate into learning activities with the children. Can I still deduct them as expenses? 9857 et seq. Childcare isnt just a family issue, its a business issue. 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 Child Care and Development Fund (CCDF) Home Visiting; . Q: Do I claim the same time-space% I used last year? Q: Are the Stabilization grants available in Canada? A: If you are incorporated and are being treated as an employee of your corporation, then the corporation will report the grant as income. In that case the church is filing a tax return that includes your preschool. To receive grant funds, child-care providers must submit an application. Congress declared that these programs are not taxable income. 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. Using Indiana's federal COVID-19 relief funding, the Office of Early Childhood and Out-of-School Learning (OECOSL) launched the Build, Learn, Grow Stabilization grant program to provide critical funding to early childhood and school-age providers, support their program's operating expenses and help them rebuild their programs for the future. Below is an additional series of questions and answers about the Stabilization Grant. In general, every licensed or regulated provider is eligible. It is also important for providers to know that not all business expenses are fully tax deductible. Q: I moved my child care business out of my home into a separate building. 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! 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: You can count all hours that you work in your home, either caring for children or doing other business activities. My CPA says if it happens again I will face the hobby law. What is that law? Grant funding amounts and distribution schedule. If you are a non-profit or not-for-profit organization, this funding is tax exempt. Q: On my grant report I listed mortgage and utilities as expenses. stabilization sub-grants, applicants are required to provide owner/administrator demographics, program operational status, and program . Is this grant counted as income? But you can pay yourself and then use that money to fund your IRA. Report as income, the amount you received from parents. Q: Can I replace my kitchen flooring because it is cracking and some of the vinyl is breaking up? For tax purposes, she should reserve a portion of the grant amount to go toward her taxes. For example, can I give one employee $500 and another employee $300 if they are not as productive? A: I dont know the answer for your particular state, sorry. 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. A: Its totally up to you how long you want to remain in business or when you want to close. Or call the OCFS Stabilization Help Line: (844) 863-9319. Our goal is to help your program become financially secure. In almost every situation, a provider will benefit financially from these grants even after taxes. You can use this amount with grant money. This blog explores the tax implications of the American Rescue Plan Act (ARPA) Child Care Stabilization Grants for Home-Based Child Care Providers. <>/Metadata 2634 0 R/ViewerPreferences 2635 0 R>> A: If you pay your husband you must treat him as an employee and file the W-2, not a 1099. 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. Example 2: Provider uses full amount for business expenses Q: If I was audited, would they just audit my grant or my entire business? You want to claim this large deduction. 721 Smith Rd. KidKare is a comprehensive record keeping program that includes an accounting section that allows you to keep track of all your income and expenses. A: Maybe, depending on how much of the grant you dont spend on business items. Q: I have a separate building for child care on the same property as my home. Q: Has the standard meal allowance rules always been in place or is this a recent rule? Q: Can I apply for the Stabilization grant if I already received the Paycheck Protection Program loan? The grant opportunities available to the state's early childhood community will help address operating and facility costs, and will support greater access and quality. If you cant get a clear answer from your state, you should pay yourself with the grant. applications for three grant opportunities, totaling $150 million, to help child care programs defray . Replace worn out bedroom carpet and hallway with wood floors? Q: How do I know how much I can ask for the grant? Q: If I give my staff a bonus am I doing it through payroll? endobj A: No, that would probably be considered a major improvement. 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. Thats just how the law works, some are taxable, some are not. Q: Can I use the grant money to rewire my home? This funding is subject to the same state and federal tax rules as regular Child Care Development Fund (CCDF) funding. A: You must report Food Program reimbursements as taxable income. Q: Can I claim my couch as a tax deduction if its used by my daycare children? Q: If I pay myself, how much will I owe in taxes? 2 0 obj Can I add the attic space in my time-space% calculation? A: Each state sets its own criteria. <>/Metadata 1131 0 R/ViewerPreferences 1132 0 R>> L*|29j]NG0Sm59!aI6a}4r. 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: No. child care, child and adult protective services, adoption, and child support services. Child Care Relief Funding 2022. If you do so, this will help support the work I do helping family child care providers be more successful as a business. Here is the recording of my recent webinar, Child Care Stabilization Grants and New Tax Changes for 2021., The tax implications of the Stabilization Grants, What expenses can be deducted in your business. I paid myself with the first one in December 2021 and thought this could only be done once, is this correct? In South Carolina, these stabilizations grants are called "SC Building Blocks". You must recalculate your time-space% each year. 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. Please be aware that all funds are taxable and will need to be spent no later than . You must treat people who help you care for children as your employees, subject to all the payroll taxes. 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 (wUu4JIvAcA:.*S5kL%4HSx gx(#-ZN(?o]Zmp onB={ 0,1 IU]MCU The Child Care Stabilization Grant is considered income and is taxable. State of Hawaii Child Care Stabilization Grant Program The State of Hawaii Department of Human Services has received funds through the American Rescue Plan Act (ARPA) of 2021 to provide assistance to licensed child care providers experiencing financial hardship and child care market instability due to COVID-19. What is the SC Building Blocks Grant? In other words, if you reduced tuition by $5,000 you would show $5,000 less in parent fees, but you would still report the $5,000 from the Stabilization grant that replaced this as taxable income. Q: Does going back to college count as hours? 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. Q: I had a flood in my home. The same answer would be for a patio or driveway or any outdoor play space. Access to safe and reliable child care is the backbone of our economy and essential for employees to get back to work. No! Q: Does it matter how much income I made this year to use the Stabilization grant to pay myself? This still leaves $2,100 for the provider to spend as she chooses (or save it). Registered family child care providers are eligible for $4,000 in grants. Q: Can I use the Stabilization grant for: Pay my employees life insurance premiums? The Stabilization Payment Program Round 2 is a nine-month payment program that runs August 2022 through April 2023. 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! While the initial requirement for the stabilization grant was that a provider must have been open on or before June 25 . The Child Care Stabilization Grant is income to your business and is taxable by the state and federal government. Some states have decided to be very lenient in how they distribute funds, some have a rigid set of regulations, and some have yet to decide how theyll give out these funds. Child Care Stabilization Fund 5 Q: How many rounds of payments will be made? 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. Q: Can I get the grant even if I dont have any helpers? 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 . Investing in Iowa's Child Care (IICC) Funding Program

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