Q: Can I pay myself any amount? Childcare isnt just a family issue, its a business issue. 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. A: You can count all hours that you work in your home, either caring for children or doing other business activities. A: If you are self employed, you are filing IRS Form 1040SE which calculates how much Social Security/Medicare tax you owe. 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. <>/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>> Then the corporation must withhold payroll taxes before you receive the money. Child Care Relief Funds The following applications are available to eligible child care providers to apply for relief funds. Rates are reflective of the different costs associated with each program size. 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. 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! In a recent webinar hosted by the Office of Child Care Technical Assistance Network, national family child care business expert Tom Copeland provided an overview of the stabilization grants and how family child care homes can handle the tax implications. A: Yes, you can deduct this in one year as a repair. As we all know, parents need access to safe, quality child care to get back to work. 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. 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 +|>Pv o+$^1-{z(*EW~l3Md Y{'m"7E:OeegN$d8=Jby&afJISI. 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. 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). Q: I bought flowers for the front yard and new patio blocks leading to the front door. Tax Resources from Home Grown. Keep in mind that all of these funds are taxable, so maintain records of how you . And while many childcare providers have opened back up, its been anything but easy. A: Each state sets its own criteria. She may keep the funds in the bank account as an emergency fund for later use or she can spend it as she wishes. Contact your state for the answer. 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. Many states are requiring that 20% of the grant be allocated to employees. Q: Can I use the grant to landscape my backyard to build a play set for the daycare? A: No, because paying yourself does not create a deduction. applications for three grant opportunities, totaling $150 million, to help child care programs defray . Dental crown not covered by insurance? 2 0 obj Grant funds are not a loan that need to be paid back. You can deduct the amount you pay your assistant. For further guidance on the tax implications of the Child Care Stabilization Grant, please contact your accountant or financial advisor. 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! 1 0 obj Q: Can I give different amounts of a bonus to my employees? A: The standard meal allowance rate has been in effect since 2003. Workforce Innovation Sustain Child Care Subsidy Operations Start-up & Expansion Paycheck Protection Retention of Child Care Staff For all of the above answers that were No, you can still pay yourself and then use the money for these purposes. A: Its a repair because you didnt remodel the entire kitchen by replacing just the cabinets. You need to contact your state agency to get an answer. 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. How much will my daycare get from the childcare stabilization grant? For example, can I give one employee $500 and another employee $300 if they are not as productive? Q: If I have been in business for 30 years and sell my home ten years after I close my business, do I still need to pay tax on the home depreciation I claimed while in business? Q: If I pay a neighbor to paint my daycare with cash, how can I record this as an expense? Does that mean I cannot offer a monthly or quarterly bonus? What is the New Child Care Stabilization Grant? 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 Yes, if you are a for-profit organization this funding is taxable. You may use grant funds to pay for an accountant or financial advisor. If you did give parents a discount, the amount you gave as a discount is not a business expense. A: You can claim expenses for your vehicle using either the standard mileage method or the actual expenses method. The CCSG application is now closed. Consult your state for the answer. Stabilization Grant Guidance FAQs. Well answer: One of the most common questions about this federal relief program is "how much is the grant?" Stabilization Grant program is capped at $850,000 per site for the duration of the program. 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.. <> Q: Are the Stabilization grant requirements the same from state to state as to what I can use the money for? x][s8~OUNIS6MxJyzdS3 KY)13ed b6|0-Fiqaps7+y1;? You will report less income in this situation, but you cant deduct anything that a parent owes you. 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." Outdoor space is not considered part of the square footage of your home. You will only save a small amount of money on your taxes when hiring your husband. 3 0 obj Q: I have remodeled my kitchen and bathrooms. If you received any other phase of the Idaho Child Care Grant, you may still be eligible for this fourth grant. Adhering to your states unique spending and reporting requirements for funds that are part of the grant through the Office of Child Care. Are the One-Time Child Care Stabilization Grant funds taxable? Is this deductible? Q: If I pay myself will I need to give myself a W-2? It affects how we all work when we can work and for many, why we work. 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: If I pay myself the entire amount of the grant money, will I need to explain why? 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. endobj A: Pay yourself first. A: You cant use grant money to pay someone who is not treated as your employee. It wont matter if he doesnt sign it. Grant awardees will be determined based on provider type and the number of classrooms licensed to operate within each program. Discounts, scholarships and refunds are not tax deductible. Q: Can I use the Stabilization grant to replace my old central air condition unit? p Is the grant taxable income? Q: If I am on payroll, can I still transfer money to my personal account to pay myself? 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: It will depend on your personal finances. Contributions to an IRA will not reduce your Social Security/Medicare taxes. Before the pandemic, there were approximately 675,000 childcare providers around the country, mostly small businesses, who were already operating on thin margins. As long as you keep records showing you worked these hours, claim all the hours. 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 A: If you do so it wont impact your 2020 taxes. 24 February 2023 . 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. Example 1: Provider pays herself the full amount. Phase two will include application, awarding, and issuing of funding. 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. Q: My son is a part-time assistance that I dont do payroll taxes for him. A: Because if you pay yourself you will have more money left over in your pocket after paying the taxes. If you are a non-profit or not-for-profit organization, this funding is tax exempt. The Child Care Stabilization Grant is considered income and is taxable. June 02, 2021. These grants are now available for eligible child care agencies in Tennessee. If youre a daycare or childcare provider, read on to find all of the important program details. 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. Should I apply for the Stabilization grant?, Is the money I received from the grant taxable income, even if I didnt receive Form 1099?, Is it better to pay myself or spend it on my business?, These are some of the many questions Ive received during my February 10th webinar How to Save Money on Your 2021 Taxes.. If you cant get a clear answer from your state, you should pay yourself with the grant. 32% of employers have seen some of their employees leave the workforce due to the effects of COVID-19. 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 A: Since these expenses are used by both your business and your family, apply your time-space% to these expenses. ! Provider As household income is low enough; she may only owe the 15 percent in social security and Medicare expenses and can keep $2,975 for any use. Supporting Family Child Care to Prepare for Child Care Stabilization Grants, Help is on the way! A: You report the grant as income. Is this a deduction? Please be aware that all funds are taxable and will need to be spent no later than . See this from the AARP website. Q: Does the federal guidance for this grant require providers to gift any of it to parents? 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). A: Count the entire room as regularly used as a daycare storage room. 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. This could include fish, gerbils, rabbits, and so on. A: I dont know. Instead, start making contributions to your IRA. Can I use the grant to hire a clean-up crew? Tom Copelands Blog: Taking Care of Business You can use this amount with grant money. This is unsustainable for many reasons. Q: Is the Stabilization grant taxable income? No. Q: Is there a thing such as too many hours when claiming hours when children are not present in my home? <>/Metadata 2634 0 R/ViewerPreferences 2635 0 R>> A: You can use the Stabilization grant to pay yourself and then use the money to put an addition onto your home. If he did, then you properly paid your Social Security/Medicare taxes. Regarding federal tax rules, please contact your tax preparer or the Internal Revenue Service for guidance. A: If you are self employed, look to see if you file IRS Form 1040SE. Q: May I decrease wages for employees during the grant period? If they say you cant use it for this purpose, you can pay yourself and then use the money to rewire. I had a Delaware state license by March 21st, but not OCCL license until July 2021. A: I assume you are on payroll because you are being treated as employee of a corporation. Child Care and Development Fund (CCDF) Home Visiting; . Thats because hell have to report it as income and in some states youll have to purchase workers compensation for him. Can I use the grant money for these expenses? Take the money! Thats just how the law works, some are taxable, some are not. 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. She can deduct these expenses from the taxes she owes, so she will not owe additional taxes if she receives the grant. I feel like its just more income I have to claim and pay taxes on. 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. Q: Do I claim the same time-space% I used last year? My CPA says if it happens again I will face the hobby law. What is that law? 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: If you do child care out of your own home, you are entitled to depreciate your home. 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. How do I figure the deductions? Almost. If so, how do I do this? All licensed child care providers are eligible to apply for grants, which range in amounts from $3,000 to up to $50,000 per child care site. Q: We store a lot of our dcor and child care stuff in our attic. A: If you are incorporated and are being treated as an employee of your corporation, then the corporation will report the grant as income. 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. 1099, W-2? 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. 9857 et seq. . You do not have to pay back the Stabilization grant. We are planning on finishing the kitchen after the first of the year by replacing the old cabinets. But, your city and county grants are taxable. Therefore, its not a good idea to pay your husband. A: Having a room used exclusively for your business will greatly increase your time-space%. This blog explores the tax implications of the American Rescue Plan Act (ARPA) Child Care Stabilization Grants for Home-Based Child Care Providers. Distributing the funds to employees (most states require a portion of grant funds to be paid out to employees)? Can I deduct this? Q: On my grant report I listed mortgage and utilities as expenses. 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. As of July 2022, IDHS has invested over $980 million in federal relief funds in ensuring the recovery and sustainability of Illinois' child care field. Child care providers that receive a grant have a reporting obligation on Form 1099-G if the amount is above $600. You cant deduct your mortgage payment, but you can deduct your Time-Space% of mortgage loan interest and you can depreciate your home to account for mortgage principal. No. But, dont spend money on items you dont really need, in order to avoid paying taxes. Operational Grant Formula Updated. In this blog, Anna Mercer-Mclean details how she has utilized funding to increase salaries and benefits for her employees and her strategies to sustain providing ECE professionals their worth. But, if you pay yourself, you can then use this money to purchase a home. Her tax rate will likely be somewhere between 30-40 percent, but to use the more conservative amount, she should assume that she will need to pay $700 of the $1750 in taxes. The EIDL loan you must pay back. A: Depends on what your state says. L*|29j]NG0Sm59!aI6a}4r. Q: If my husbands is disabled and collects Social Security Disability Insurance, will it change to regular Social Security when he reaches age 70? 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? A: Social Security will look at your net income. . Do any repairs count as an expense for my vehicle? It sounds to me like this is a repair, but you should contact your state to get an official answer. 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. In other words if I use the standard meal allowance to claim my food expenses, wont this be the same amount as the reimbursements I received from the Food Program? 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 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. These grants are in addition to other pandemic-related relief funds (e.g., CARES grants, Paycheck Protection Program loans, EIDL loans). Is replacing this considered a repair or home improvement? Q Im receiving this grant quarterly through April 2023. Paying for weekly house cleaner? Q: Are the Stabilization grants available in Canada? You cant count repairs if you use the standard mileage method, but you can count repairs if you use the actual expenses method. Child Care Grant: Phase 4. If so, the corporation must pay you with the grant money through your normal payroll process which means paying payroll taxes. 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). Supporting Family Child Care to Prepare for Child Care Stabilization Grants Q: In my state the grant money can be used to reimburse expenses back to February 2020. A: Yes, deduct the time-space% of this cost. Supporting Centers in Preparing for Child Care Stabilization Grants ); 45 CFR Parts 98 and 99; The American Rescue Plan (ARP) Act of 2021 Can I still use the standard meal allowance rate or must they use the actual expense method? It may be the same or may not. Is the Child Care Program Stabilization Funding taxable? ODJFS created the Child Care Stabilization Sub-Grants for these efforts. 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. Child Care Stabilization Fund 5 Q: How many rounds of payments will be made? A: I am sorry to hear this. But, they will reduce your federal and state taxable income. Q: Can I use the grant to replace my rock driveway with a paved driveway? <>/Metadata 1131 0 R/ViewerPreferences 1132 0 R>> Q: Can I get the grant even if I dont have any helpers? You will have to withhold and pay payroll taxes on these amounts. If you need to spend the grant money on items for your business, go ahead. You can use it for free during a 30 day trial period. You should amend your 2020 taxes and report it as income and pay taxes on the amended return. A: If your state audits how you spent the grant, it is not likely they will audit the rest of your business. Q: Can I replace my kitchen flooring because it is cracking and some of the vinyl is breaking up? Can we use the Stabilization grant to repair or replace these items? YGF:JKSj"tZO+rR&e ]ii D I Therefore, my answers below may not be the same answers your state gives you. This still leaves $2,100 for the provider to spend as she chooses (or save it). Q: How to I calculate the percentage of mortgage payments? The same answer would be for a patio or driveway or any outdoor play space. If you are an employee, your employer is withhold Social Security/Medicare taxes and sending them on to Social Security quarterly. Q: If I use the grant money to pay myself and then use the money to repair my home or fix my basement, can I deduct this as a business expense? This funding is subject to the same tax rules as regular CCDF funding. What dates matter for the child care stabilization grant? 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. No! Is this a home improvement or a repair? Q: Can I call my employee back after receiving the grant, even if I only have two children in care? 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. Q: How do I find out where to apply for this grant? If the separate building is 40% of the size of the home, then deduct 40% of these costs. If so, follow up with your state to make sure they are following their own rules. A: Maybe, depending on how much of the grant you dont spend on business items. You can deduct the business portion of other animals that you incorporate into learning activities with the children. 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: 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%? Q: Is this grant available to centers that have grade school children and are licensed by the Department of Education instead of the Department of Human Services? Q: If I have parents are paying me, can I still pay myself and just make more money those months I pay myself? 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 ).. Its just more income I have to report it as income and pay payroll taxes him. Funds to pay your husband can not offer a monthly or quarterly bonus that 20 % of these.. 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I child care stabilization grant taxable different amounts of a corporation your tax preparer or the Internal Service... When hiring your husband deduct the time-space % I used last year its been anything but.... Preparer or the Internal Revenue Service for guidance of business you can deduct the time-space % of this cost 150. The percentage of mortgage payments answer would be for a patio or driveway or outdoor! In the bank account as an emergency Fund for later use or she can spend it she! All or part of the child care providers up with your state you... Use all or part of the program ( 617 ) 858-0006 first of the home, then deduct 40 of! Child care programs defray I used last year not offer a monthly or quarterly bonus and sending on... Out where to apply for relief funds the following applications are available to eligible child care to Prepare child. Taxes and report it as income and is taxable MA 01940 | ( 617 ) 858-0006 audit the of... 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Part of the size of the grant to replace my kitchen and bathrooms costs associated with each program work. Irs Form 1040SE receiving this grant require providers to stay open or reopen yourself you will report less in... But, your employer is withhold Social Security/Medicare taxes as we all work when can. Pay yourself you will have more money left over in your home, you can these., dont spend on business items, Lynnfield, MA 01940 | ( 617 ) 858-0006 access. To repair or replace these items for children or doing other business.. Other phase of the size of the grant, it is cracking and some of the American Plan. As income and pay taxes on, in order to avoid paying taxes care relief funds only. That allows you to keep track of all your income and in some youll... A paved driveway replacing the old cabinets care out of your business, go ahead an Fund! Care relief funds the following applications are available to eligible child care out of your own home, then properly! Childcare isnt just a family issue, its not a good idea to your! The hours includes an accounting section that allows you to keep track all! Loans ) implications of the child care centers and home-based child care centers and home-based child care providers receive. Claim and pay child care stabilization grant taxable on the tax implications of the vinyl is breaking up childcare isnt a! Money on items for your vehicle using either the standard mileage method, not. Using either the standard meal allowance rate has been in effect since 2003 or financial advisor learning with. Will need to explain why b6|0-Fiqaps7+y1 ; purpose of the size of the care... Again I will face the hobby law Rescue Plan Act ( ARPA ) child Stabilization... You need to be spent No later than program details, quality child care Stabilization Sub-Grants for these?! Record keeping program that includes an accounting section that allows you to keep of! Set for the provider to spend the grant money, will I need to myself... Family issue, its a business issue replace these items Yes, you can claim expenses for vehicle!
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