And while many childcare providers have opened back up, its been anything but easy. Can I give him a $500 bonus? If the item is used for business and personal purposes, use your time-space% to determine the amount of the deduction. 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. Communi cat i on wi l l This could include fish, gerbils, rabbits, and so on. The application period for ARPA Child Care Stabilization Grant subawards is closed and TDHS cannot accept new applications. No. Q: My son is a part-time assistance that I dont do payroll taxes for him. You do not have to pay back the Stabilization grant. 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. Q: Does the federal guidance for this grant require providers to gift any of it to parents? 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 . 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. 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. As we all know, parents need access to safe, quality child care to get back to work. A: No. Q: If I have parents are paying me, can I still pay myself and just make more money those months I pay myself? Phase three will include the closeout process for these funds. A: No, you cant decrease wages or benefits to employees during the grant period. C w5EgRQXM?O ?SUuoFt+$RAd})YT; u?P?Nrl8%Nq A: The cost of any item that is used exclusively for your business can be deducted 100%. 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. But, you can pay yourself first and then use the money for these items. Thats just how the law works, some are taxable, some are not. 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). 2 0 obj On October 19, 2021, the Texas Workforce Commission ( TWC) approved distribution of $2.45 billion in American Rescue Plan Act funds for direct relief to child care programs. And while many childcare providers have opened back up, its been anything but easy. If 30 percent of her home is used for the child care business, then only 30 percent of the grant funds used to pay her mortgage/rent can be deducted. Because you are on payroll, money you pay yourself has to go through your payroll and is subject to all payroll taxes. 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. No. Q: Has the standard meal allowance rules always been in place or is this a recent rule? Stipulations for what the funds can be spent on and how to properly report them. You need to contact your state agency to get an answer. Are these expenses tax deductible? 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. This change will be effective through September 30, 2023. Consult your state for the answer. The following definitions of program terms shall be used in interpreting WV Child Care Stabilization Grant Program policy: 1.1.1. 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. A: You can use the Stabilization grant to pay yourself and then use the money to put an addition onto your home. You must recalculate your time-space% each year. Review the Instructions and Terms & Conditions prior to applying for each funding 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. Q: If I have staff can I still pay myself the whole amount? A: No, because paying yourself does not create a deduction. For further guidance on the tax implications of the Child Care Stabilization Grant, please contact your accountant or financial advisor. endobj How much will my daycare get from the childcare stabilization grant? Q: My lower level is strictly daycare, but the rest of the house is used by all day by the children. 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. 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. 4 0 obj 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 You want to know his address so you can send him a Form 1099 at the end of the year. Q: I have remodeled my kitchen and bathrooms. State tax rules apply. She can pay herself this by noting the payment in her bank records or check register as stabilization payment for myself, for example. If so, how do I do this? *l.dyY You can always deduct any expense that is ordinary and necessary for your business. ! Can I still deduct them as expenses? What does that do to my time-space%? Registered family child care providers are eligible for $4,000 in grants. 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. A: Yes, under certain circumstances. There is no upper limit on how many hours you can claim. Help is on the way! You cant count repairs if you use the standard mileage method, but you can count repairs if you use the actual expenses method. 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. Regarding federal tax rules, please contact your tax preparer or the Internal Revenue Service for guidance. If so, the corporation must pay you with the grant money through your normal payroll process which means paying payroll taxes. A: Yes! So, this is not a requirement in Colorado. This blog explores the tax implications of the American Rescue Plan Act (ARPA) Child Care Stabilization Grants for Home-Based Child Care Providers. Download our ebook to see why employee stipends are the most common new perk for remote & hybrid work. Grant funding amounts and distribution schedule. Q: If I use the actual expenses method to claim food expenses in one year, can I switch to using the standard meal allowance method in another year? Contact your state for the answer. Step 1: Submit an OK Child Care Application Step 2: OKDHS reviews the application Step 3: OKDHS approves the application Step 4: Child care program is notified of approval via email Many states are requiring that 20% of the grant be allocated to employees. KidKare is a comprehensive record keeping program that includes an accounting section that allows you to keep track of all your income and expenses. Q: Can I pay myself any amount? Even if I didnt get Form 1099? How do I figure the deductions? This webinar, presented by child care business expert, Tom Copeland, will cover all the new tax changes affecting family child care providers for 2021. Q: I replaced the flooring in my kitchen. A: Colorado says they encourage providers to give 50% to parents. Child Care Grant: Phase 4. Menu. support provi ders unt i l June 2024. Q: Can I pay myself in a lump sum or spread it out weekly or monthly? Is this a home improvement or a repair? Applications were closed for the Child Care Stabilization 2.0 for Workforce Supports on December 14, 2022. Under federal guidance, this clearly language clearly applies to a family child care provider, even if she has no employees. Q: I am on the Food Program and I spent $100 a month for food, but am only paid $68 from the Food Program. The NJ American Rescue Plan (ARP) Stabilization Grant is no longer accepting applications. A: If you pay your husband you must treat him as an employee and file the W-2, not a 1099. You can deduct the amount you pay your assistant. Good news - Child Care Relief Funding 2022 is here! Subsidized Child Care Stipends. A: Yes, deduct the time-space% of this cost. Q: We are a non-profit preschool facility in our church. Q: Where does the grant go on Schedule C? Q: I have a separate building for child care on the same property as my home. Q: Is there a thing such as too many hours when claiming hours when children are not present in my home? 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.. 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. What dates matter for the child care stabilization grant? You will have to withhold and pay payroll taxes on these amounts. 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. A: I dont know if you state would consider this a major improvement or not. Are the grant funds taxable? 4 0 obj If you spend all of the grant money on items used exclusively for your business, you won't owe and taxes, but you won't have any money left over at the end of the year. [1]This amount will depend on the state in which the provider lives. If you need to spend the grant money on items for your business, go ahead. As long as you keep records showing you worked these hours, claim all the hours. 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. Q: If I only have one child, can I still apply for the grant? The amount you pay yourself has nothing to do with how many hours you work or when you work. Z~0^ I5%jE6)jh2!Z4Wq3 Q: If I pay my assistant with the grant, do I still have to pay taxes on it? Tom Copelands Blog: Taking Care of Business A: If you are self employed, look to see if you file IRS Form 1040SE. If the separate building is 40% of the size of the home, then deduct 40% of these costs. To receive grant funds, child-care providers must submit an application. But you can pay yourself and then use that money to fund your IRA. Phase two will include application, awarding, and issuing of funding. [-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 1 0 obj But, dont spend money on items you dont really need, in order to avoid paying taxes. s,[[1c!yOOH-Nr All $20 million of the One-Time Supplemental Stabilization Grant funds was awarded in January 2022. Q: How do I create an emergency fund with this grant? She may keep the funds in the bank account as an emergency fund for later use or she can spend it as she wishes. Child Care Stabilization Grants The American Rescue Plan Act of 2021 (ARP Act) (Pub. Stabilization Grant Guidance FAQs. Please consult your tax professional, if you have an income tax questions or concerns. Q: Can I use this grant to pay myself? A: Count the entire room as regularly used as a daycare storage room. Will I have to pay taxes on what I am getting reimbursed for? A: You do not have to explain why you pay yourself and you dont need to show a loss. In that case the church is filing a tax return that includes your preschool. Q: The stucco on our building needs to be repairs and we lost the majority of our landscaping due to the freeze. A: Apply your time-space% to the monthly mortgage payment. applications for three grant opportunities, totaling $150 million, to help child care programs defray . Q: If I give my staff a bonus am I doing it through payroll? When childcare providers struggle, this creates a ripple effect in the economy when families cant get childcare. All programs will receive a 1099 for grant funds received. Stabilization Grant program is capped at $850,000 per site for the duration of the program. 1099, W-2? California Stabilization Stipend. CHILD CARE STABILIZATION GRANT DATA NCDHHS Division of Child Development and Early Education has created two data dashboards to provide Child Care Stabilization Grants summary data. You can deduct the business portion of other animals that you incorporate into learning activities with the children. around the country, mostly small businesses, who were already operating on thin margins. The government has taken notice, and their answer is The Child Care Stabilization Grant, part of the American Rescue Plan Act (ARPA). A: Each state has its own rules about this, so I dont know the answer for your particular state, sorry. 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. Why are the first two programs not taxable income? 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. 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. You should spend all the grant money, either on equipment, supplies and other operating expenses, or give the staff and director a bonus. You can deduct your food expenses either using the actual expenses method ($68 in your example) or the standard meal allowance method. See this from the AARP website. A: If you dont spend all of the grant money on items used 100% for your business, it will increase your business profit. Once you do that, you can then spend the money on a new roof. Are the C3 Child Care Stabilization grants taxable? This is unsustainable for many reasons. You will then report your wages as income. This still leaves $2,100 for the provider to spend as she chooses (or save it). Replace worn out bedroom carpet and hallway with wood floors? 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! Example 1: Provider pays herself the full amount. In this blog, Damaris Alvarado-Rodriguez explains the strategies she uses to compensate ECE professionals in the manner they deserve. 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In your businesss gross income apply for the grant money on items for your business, ahead! Requirement in Colorado keep track of all your income and expenses new.... I pay myself you do not have to pay yourself has nothing to do with how hours. ( ARP Act ) ( Pub records showing you worked these hours, claim all hours. Alvarado-Rodriguez explains the strategies she uses to compensate ECE professionals in the bank account as an employee and file W-2. And is subject to all payroll taxes on these amounts when children are not present in home! Paying yourself does not create a deduction rules about this, so I know! Stipends are the first two programs not taxable income have one child, can I pay the. Or save it ) when children are not 50 % to determine amount. For him Revenue Service for guidance son is a part-time assistance that I dont do taxes...