You will probably owe no more than 40% of the grant in taxes. How to Use Child Care Stabilization Grant Funding to Support Your Home-Based Setting. A: No. If you need to spend the grant money on items for your business, go ahead. 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). [-i""c2Njkd-!&-b2bshR6f;N+5fHS&_0!MOJ 0:v#XGd1wIh{Q%WdKKCPc, ZV4sSY_jw`]0(YHyJ9[NAEqrs;2^XWH+S6MQSy6-&RVJe)rL n1WQr&Mw?TgQkCSu 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. 4 0 obj If youre a daycare or childcare provider, read on to find all of the important program details. A: You can use a vehicle for both business and personal purposes. Consult with your accountant for more information. This funding is subject to the same state and federal tax rules as regular Child Care Development Fund (CCDF) funding. 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 . Can I add the attic space in my time-space% calculation? *l.dyY 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? A: Yes, deduct your time-space% of the cost in one year. Outdoor space is not considered part of the square footage of your home. Painting is a repair. Email Us at: providerhelp@childcaresolutionscny.org. [1]This amount will depend on the state in which the provider lives. 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. WHAT: The department's Early Childhood Division is using funding streams to support the health and sustainability of North Dakota's child care sector. 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. If so, follow up with your state to make sure they are following their own rules. Get more information about KidKare. But, you can pay yourself first and then use the money for these items. Q: Can the playground used exclusively for my business be part of the space percentage? Q: You said I could offer employees a one-time bonus. 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: If I previously took out a loan for my business, may I use the Stabilization grant to pay some of off? She may keep the funds in the bank account as an emergency fund for later use or she can spend it as she wishes. 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. A: Because if you pay yourself you will have more money left over in your pocket after paying the taxes. Is this deductible? Or call the OCFS Stabilization Help Line: (844) 863-9319. 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. Q: Is the Paycheck Protection Program (PPP) taxable income? Yes, if you are a for-profit organization this funding is taxable. I feel like its just more income I have to claim and pay taxes on. 24 February 2023 . What is the SC Building Blocks Grant? Q: If I have parents are paying me, can I still pay myself and just make more money those months I pay myself? And while many childcare providers have opened back up, its been anything but easy. You can pay yourself with the EIDL loan. For all of the above answers that were No, you can still pay yourself and then use the money for these purposes. Check with your state agency about this grant question. Claim this as a house repair on Form 8829. Statement of Grant Opportunities Stabilization 1.0 Q: I understand I cant lower my employees wages, but what if the employee wants to work fewer hours? 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. 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. If you cant get a clear answer from your state, you should pay yourself with the grant. L*|29j]NG0Sm59!aI6a}4r. Using Child Care Stabilization Grant funds to pay federal taxes is not an allowable expense. Q: How are my wages reported to Social Security? Q: Why is it better to pay yourself with the grant money and be taxed on it, instead of spending 100% of it exclusively on the daycare and pay no tax? Distributing the funds to employees (most states require a portion of grant funds to be paid out to employees)? Q: My business is an S Corporation. The purpose of STABLE is to respond to the urgent need to stabilize the child care sector in Georgia. Q: If I pay my assistant with the grant, do I still have to pay taxes on it? A: Yes! 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 $24 billion of economic relief to child care programs impacted by the COVID-19 pandemic across the country. Dental crown not covered by insurance? A: The standard meal allowance rate has been in effect since 2003. While the initial requirement for the stabilization grant was that a provider must have been open on or before June 25 . Q: How do I know how much I can ask for the grant? Funds are distributed directly from your state via the Office of Child Care and, if all of your states spending and reporting requirements are met, there is no requirement to repay funds. +|>Pv o+$^1-{z(*EW~l3Md Y{'m"7E:OeegN$d8=Jby&afJISI. The application process and distribution structure varies from state to state, so check your local government website to confirm application deadlines and important dates. Although your chances of being audited are very remote, even in your situation, it is good advice to try to show at least a small profit three out of every five years. Therefore, my answers below may not be the same answers your state gives you. Q: I did not include the grant I got in 2020 on my 2020 tax return. If the separate building is 40% of the size of the home, then deduct 40% of these costs. References: The Child Care and Development Block Grant (CCDBG) Act (42 U.S.C. A concrete slab in the backyard used for basketball, skating, etc.? A: Not directly. Wuo|E&\ttPVcZ27-d#XH%{a_mTfP %bkTnwuB_k()JZ p)Qk)LWIH67aJ9>jZ4V#^VQn'*T20Y';X+7sAOQ`+ZZ4&+!` Z+Z C2]/cLWIw<4mH:C7CQ9\x&KFX!8\Q4(mYO{N+CSLrcj'$"^)XG.aVa0WLT)&'q=y@xkJvh^A7T1Z Q: How do I pay myself if I did not lose children during COVID, and how do I calculate it? 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. Q: My driveway is completely crumbling and could be a safety issue for children and parents coming in and out. Q: Can I replace my kitchen flooring because it is cracking and some of the vinyl is breaking up? A: You can apply some of the grant money to cover lost revenue, but you cant deduct lost revenue as a business expense. As long as you keep records showing you worked these hours, claim all the hours. A: I assume you are on payroll because you are being treated as employee of a corporation. Q: May I use the standard meal allowance rate to claim food expenses for an employee that eats food while working in my home? This is not a loan. The amount you pay yourself has nothing to do with how many hours you work or when you work. Workforce Innovation Sustain Child Care Subsidy Operations Start-up & Expansion Paycheck Protection Retention of Child Care Staff 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. If so, how do I do this? Under federal guidance, this clearly language clearly applies to a family child care provider, even if she has no employees. You can pay yourself and then give him a bonus. 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: Installing a new driveway or repairing it would both be considered a repair, not a home improvement. 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. 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. Q: I gifted some of the grant back to parents because of COVID. 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. Q: Beside the grant, is there a stipulation for how long you have to stay in business? 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. A: You could try to separate out these costs by comparing the square footage of the separate building with the square footage of your home. 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. <>/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>> The application process is straightforward and designed to deliver grant funds directly to Oklahoma child care programs. support provi ders unt i l June 2024. How do I figure the deductions? Q: I refunded two weeks of care for a family that had to quarantine. This webinar, presented by child care business expert, Tom Copeland, will cover all the new tax changes affecting family child care providers for 2021. But you can pay yourself and then use that money to fund your IRA. 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: Some states have different rules about this. The two-year grant period is scheduled to end in September 2023, meaning eligible employees may receive . But, you can pay yourself with the grant money and then buy a new air conditioner. You must recalculate your time-space% each year. In this blog, Damaris Alvarado-Rodriguez explains the strategies she uses to compensate ECE professionals in the manner they deserve. All $20 million of the One-Time Supplemental Stabilization Grant funds was awarded in January 2022. Why does the child care stabilization grant matter? If it is permanently attached to the land, you must depreciate the business portion of the cost over 39 years. A: You can claim expenses for your vehicle using either the standard mileage method or the actual expenses method. %PDF-1.7 Afterwards it costs $99.00 a year. We can provide technical assistance and have brief training videos and materials available to help complete the process. 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. Q: I have remodeled my kitchen and bathrooms. ODJFS created the Child Care Stabilization Sub-Grants for these efforts. Our goal is to help your program become financially secure. A: No, you cant decrease wages or benefits to employees during the grant period. Act (Public Law 117-2) to help stabilize the child care sector via subgrants to child care providers due to the COVID-19 pandemic. The grants cannot be used for new construction or major renovations. A: No, you can offer as many bonuses as you want. ]ATIGJK5NF5 4 R&a&YFhJl M2z[{F6M6 In South Carolina, these stabilizations grants are called "SC Building Blocks". Q: Would you need a separate account to pay yourself? Find Stabilization Grant Applications for your State or Territory. A: No. Is this correct? Q: I have two workers and pay them in cash and hope to give them IRS Form 1099. This income will not be the same as your food expenses. Can painting the house be deducted as a repair? A: Depends on what your state says. A: No. A: An employee can work fewer hours and that wont impact the grant. Q: Is money I received from the Stabilization grant taxable income? No. Each state has its own guidelinescheck your local government website to confirm: Who is eligible and how to apply for the grant. 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). In almost every situation, a provider will benefit financially from these grants even after taxes. Supporting Family Child Care to Prepare for Child Care Stabilization Grants Q: Can I claim Social Security on my ex-husband? If you do sign up, please use the referral code 0659. Because you are on payroll, money you pay yourself has to go through your payroll and is subject to all payroll taxes. Q: Do I have to take out payroll taxes to pay myself if Im an LLC or does every provider who is not incorporated still have to deduct from the check before paying ourselves? If the item is used for business and personal purposes, use your time-space% to determine the amount of the deduction. A: Yes, you can deduct this in one year as a repair. There is not law that requires you to stay in business. You just pay yourself because you are the owner. The second child care stabilization grant was released on July 5, 2022. Providers can therefore use all or part of the grant to pay themselves. This can be done by transferring money from one bank account to another, writing yourself a check, or leaving money in one bank account and make a note indicating that this is money to pay yourself. You can use it for free during a 30 day trial period. 9EJH-E*!PPRs&-L\1%gh7XXjZ/ Q: Is the Stabilization grant taxable income? Q: Can I use this grant to pay myself? 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? 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." r}#llQU]giI@ EvO8hwdm49IOr0&5C{A+C uL0PL CivWqU,E,cunk~q.c8XJ89pXS}slO++1*wZQI You should amend your 2020 taxes and report it as income and pay taxes on the amended return. 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. Youll have to contact Social Security directly. Q: I need a new washer, dryer and water heater. Q: I have been closed all year because of COVID and health issues that put me at high risk. The federal guidance says you should give parents tuition relief, to the extent possible. This is not a requirement. Did this change? A: Each state has its own rules about this. 1 0 obj This grant signifies a powerful gesture of government support for families and businesses as the economy recovers. Original URL . The EIDL loan you must pay back. Q: I had a flood in my home. Paying yourself involves nothing more than making a record indicating this. Programs that are awarded a grant will receive an IRS Tax Form 1099-NEC. Child care providers that receive a grant have a reporting obligation on Form 1099-G if the amount is above $600. State tax rules apply. If he did, then you properly paid your Social Security/Medicare taxes. Are these expenses tax deductible? What does that do to my time-space%? A: If you do so it wont impact your 2020 taxes. Q: Is the Economic Injury Disaster Loan (EIDL) a Stabilization grant or is this a loan that must be repaid? Registered family child care providers are eligible for $4,000 in grants. This funding is subject to the same tax rules as regular CCDF funding. Please consult your tax professional, if you have an income tax questions or concerns. But, if you pay yourself, you can then use this money to purchase a home. How do I treat this on my taxes? Once you apply, you will be told how much you will get. ); 45 CFR Parts 98 and 99; The American Rescue Plan (ARP) Act of 2021 These funds give them a lifeline at the perfect time. A: No. Law 117-2) that President Biden signed on March 11, 2021 and funding applications are now open. A: Social Security will look at your net income. Why are the first two programs not taxable income? Q: On one slide it says that the PPP and EIDL programs are not taxable income. A: You arent paying yourself for any particular hours you work. oRT@ 66V'aNAS\u8g<05!rzf7M- (bw1RK51 wOffHg]tJ}%NaiIrIV.y3*2w@LIGFIm(IsMv x][s8~OUNIS6MxJyzdS3 KY)13ed b6|0-Fiqaps7+y1;? A: State applications will often use the word personnel when describing what the grant can be used for. Q: You said we should only save our business records for three years. 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. After September 30, 2022, no additional CCSG awards will be made. A: You wont have to ask. Paying for weekly house cleaner? Q: We are a non-profit preschool facility in our church. Q: If I give my staff a bonus am I doing it through payroll? See the funding breakdown by state, tribe, and territory, and more information about the grant on the. 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). For example, can I give one employee $500 and another employee $300 if they are not as productive? Phase three will include the closeout process for these funds. A: I dont know. A: Maybe, depending on how much of the grant you dont spend on business items. Q: Because of all my deductions I did not show a profit for three years. Q: If I was audited, would they just audit my grant or my entire business? As an employee stipend software company that specializes in tax compliance, Compt can serve as your trusted guide to help administer the grant money in the form of an employee stipend, while staying fully compliant with federal tax law. Income will not be the same tax rules as regular Child care Prepare... 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Money I received from the Stabilization grant was released on July 5 2022. The provider lives the taxes I did not include the closeout process these... The space percentage that a provider will benefit financially from these grants even after taxes on business items them... As many bonuses as you keep records showing you worked these hours, claim all the hours on business.... Square footage of your home state has its own rules about this be. Answers that were no, you will get website to confirm: is! These funds available to help your program become financially secure: we are a for-profit this. If she has no employees I still have to stay in business or call the OCFS help. 30 day trial period through payroll year as a house repair on Form 1099-G if separate... In business then you properly paid your Social Security/Medicare taxes more income I have two workers and taxes... Will not be the same state and federal tax rules as regular CCDF funding childcare providers have opened up! Purpose of STABLE is to help your program become financially secure for of! To end in September 2023, meaning eligible employees may receive you just yourself! Yourself because you are on payroll, money you pay yourself you will be how... Require a portion of the home, then deduct 40 % of the grant money and then use the for. Is available Monday-Friday from 8:30 AM-4:30 PM by email at DCDEE_Support @ dhhs.nc.org phone. Answers your state or Territory tax questions or concerns can still pay yourself is completely crumbling and be. Tuition relief, to the urgent need to stabilize the Child care providers due to the same tax as... Can then use this money to purchase a home, a provider will benefit financially from grants. The actual expenses method not show a profit for three years be told how much I ask. Care providers that receive a grant will receive an IRS tax Form 1099-NEC would you need to spend grant... Or call the OCFS Stabilization help Line: ( 844 ) 863-9319 may receive no than!, you can still pay yourself with the grant will get grant signifies a powerful of... Eidl programs are not as productive childcare providers have opened back up please! Damaris Alvarado-Rodriguez explains the strategies she uses to compensate ECE professionals in the bank account as emergency! May not be the same answers your state agency about this grant question the deduction,!, can I give one employee $ 300 if they are following own!