Why are the first two programs not taxable income? A: It will depend on your personal finances. 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 If you are an employee, your employer is withhold Social Security/Medicare taxes and sending them on to Social Security quarterly. Important note: Although there is federal guidance on how the Stabilization grants are to be administered, each state may interpret this guidance slightly differently. ]ATIGJK5NF5 4 R&a&YFhJl M2z[{F6M6 Q: On my grant report I listed mortgage and utilities as expenses. A: Maybe, depending on how much of the grant you dont spend on business items. <>/Metadata 1131 0 R/ViewerPreferences 1132 0 R>> 1 0 obj This income will not be the same as your food expenses. This still leaves $2,100 for the provider to spend as she chooses (or save it). If you are considered a hobby, you might not be able to deduct all of your expenses. Q: Can I use the Stabilization grant to replace my old central air condition unit? 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. Contact your state to get the answer. Youll have to contact Social Security directly. Provider C receives a $3,500 grant and uses the money to pay for equipment that is used for both her business and her family (e.g., computer, television, furniture). Q: Is the Stabilization grant taxable income? You should spend all the grant money, either on equipment, supplies and other operating expenses, or give the staff and director a bonus. Stabilization Grant program is capped at $850,000 per site for the duration of the program. The federal guidance says you should give parents tuition relief, to the extent possible. This is not a requirement. I thought it was seven years. Such a record could say, February 23, 2022 - $4,000 pay myself with the Stabilization grant.. r}#llQU]giI@ EvO8hwdm49IOr0&5C{A+C uL0PL CivWqU,E,cunk~q.c8XJ89pXS}slO++1*wZQI Painting is a repair. <>/Metadata 2634 0 R/ViewerPreferences 2635 0 R>> Take the money! Q: If a parent leaves my program owing me money, is that considered a bad debt that I can deduct? Q: If my husbands is disabled and collects Social Security Disability Insurance, will it change to regular Social Security when he reaches age 70? You will then report your wages as income. For specific questions about the NJ ARP Stabilization Grant application, contact: Email: [email protected] 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: [email protected] Example 2: Provider uses full amount for business expenses 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. If you need to spend the grant money on items for your business, go ahead. This is clearly the case if you were receiving the lower Tier II reimbursement rate before July. endobj Q: When you give a bonus to your staff, do you treat the deduction the same as payroll deductions? . Certificate of Registration: A statement issued by the Commissioner for a period of up to two years to a family child care home upon receipt of a self-certification statement The Child Care Workforce Stabilization grants supply funding to help child care providers recruit and retain qualified employees as the industry recovers from the pandemic. around the country, mostly small businesses, who were already operating on thin margins. You want to know his address so you can send him a Form 1099 at the end of the year. %PDF-1.7 Programs that are awarded a grant will receive an IRS Tax Form 1099-NEC. Q: I bought flowers for the front yard and new patio blocks leading to the front door. A: I dont know if you state would consider this a major improvement or not. Discounts, scholarships and refunds are not tax deductible. stream A: The PPP and EIDL programs are administered through the Small Business Administration. ODJFS created the Child Care Stabilization Sub-Grants for these efforts. But, they will reduce your federal and state taxable income. Afterwards it costs $99.00 a year. 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. In addition, if you served any additional meals or snacks that you were not reimbursed for, your food expenses would be higher than your reimbursement income. 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. Contact your state for the answer. You can deduct all of the reimbursed meals and snacks as well as un-reimbursed meals and snacks. 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: Yes. Can I still receive the Stabilization grant? It may be the same or may not. Youll have to contact the state agency that administers this grant. 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. 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. The Stabilization Payment Program Round 2 is a nine-month payment program that runs August 2022 through April 2023. Tax Resources from Home Grown. Q: You said I could offer employees a one-time bonus. 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. 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. Q: I understand I cant lower my employees wages, but what if the employee wants to work fewer hours? It doesnt matter how much or how little you are now earning. The utilities and internet are combined. It wont matter if he doesnt sign it. I plan to discount the current family tuition evenly. Now, thanks to passage of the American Rescue Plan Act of 2021, the child care sector will receive a total of more than $50 billion in direct relief funding. 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? Should I pay myself first with the grant money and then make payments on the vehicle? OCFS has awarded $208 million to 12,578 child care providers through the Stabilization 2.0 for Workforce Supports grant. All Rights Reserved. <> Q: We are a non-profit preschool facility in our church. Q: What is the most effective way to pay my husband who is working with me full time? The answer is yes, these funds are taxable. A: Yes. If it is permanently attached to the land, you must depreciate the business portion of the cost over 39 years. Our goal is to help your program become financially secure. Q: Does the federal guidance for this grant require providers to gift any of it to parents? A: Its totally up to you how long you want to remain in business or when you want to close. Once you do that, you can then spend the money on a new roof. ! Q: Is a new roof a major or minor repair? Q: If I was audited, would they just audit my grant or my entire business? Q: Are the Stabilization grants available in Canada? Adhering to your states unique spending and reporting requirements for funds that are part of the grant through the Office of Child Care. Q: Can I replace my kitchen flooring because it is cracking and some of the vinyl is breaking up? Q: In your opinion, if I dont need the grant, should I take it? No! Q: Can I use this grant to pay myself? Q: Can I deduct the business portion of any item in one year regardless of the cost? How long do I have to stay in business if I receive stabilization grant funding? Not all applications are guaranteed to be approved. Contact your local Child Care Resource and Referral agency to see if there are other grant programs. Q: Would it be beneficial for me to take the Stabilization grant in 2021 or wait until 2022? Providers who received funding during the first round must complete an expenditure report before . Programs that are awarded a grant will receive an IRS Tax Form 1099-NEC. A: Only if you already have a post-secondary degree. 5 Child Care Workforce Stabilization Grant Payout Schedule Qualifying Employment Period - Employees must be employed at least 30 days prior to the beginning date of the qualifying period through the end of this time period to be eligible for the quarterly bonus. L*|29j]NG0Sm59!aI6a}4r. 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. Whenever a provider sells her home, she will always have to pay tax on the depreciation you claimed, or were entitled to claim! Consult your state for the answer. You would be replacing lost tuition with grant income. Can I give him a $500 bonus? Because you are on payroll, money you pay yourself has to go through your payroll and is subject to all payroll taxes. A: The standard meal allowance rate has been in effect since 2003. A new 1099-NEC form for reporting non-employee compensation was introduced by the IRS for 2020. 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: Yes! 3 0 obj Q: You said we should only save our business records for three years. A: Yes, you can deduct this in one year as a repair. 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. And while many childcare providers have opened back up, its been anything but easy. No. A: No. 2 0 obj If you received any other phase of the Idaho Child Care Grant, you may still be eligible for this fourth grant. You will only save a small amount of money on your taxes when hiring your husband. Do any repairs count as an expense for my vehicle? 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. Using a reimbursement model, management and reporting is easy and takes the burden off your HR team. Buy a new vacuum cleaner, front door porch light, replace old gutters, large kitchen appliances, install a new kitchen island? Minnesota child care providers were able to apply for these grants as part of their January 2022 Child Care Stabilization Base Grant application. A: You can count all the hours children are present in your home. 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. Q: Can I pay myself in a lump sum or spread it out weekly or monthly? Tom Copelands Blog: Taking Care of Business If the item is used for business and personal purposes, use your time-space% to determine the amount of the deduction. Email Us at: [email protected]. Are these expenses tax deductible? Even if I didnt get Form 1099? Each state will determine how much a provider will receive based on a criteria they have developed. 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? 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. Q: May I decrease wages for employees during the grant period? Q: The stucco on our building needs to be repairs and we lost the majority of our landscaping due to the freeze. You would report $5,000 as income and $2,000 as an expense, and end up paying taxes on the difference, or $3,000. The Child Care Stabilization Grant is income to your business and is taxable by the state and federal government. You will report this as income and pay Social Security/Medicare taxes as well as federal and state income taxes on this income. / Blog / General / child care stabilization grant taxable. Q: Does going back to college count as hours? 32% of employers have seen some of their employees leave the workforce due to the effects of COVID-19. 2. A: Apply your time-space% to the monthly mortgage payment. Does that mean I cannot offer a monthly or quarterly bonus? Keep enough records to show that children are present 24 hours. 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." Distributing the funds to employees (most states require a portion of grant funds to be paid out to employees)? You will always be better off financially after taking a grant, even if it increases your taxes. (wUu4JIvAcA:.*S5kL%4HSx gx(#-ZN(?o]Zmp onB={ 0,1 IU]MCU Q: My business is an S Corporation. Are those grants considered taxable income? A: You can apply some of the grant money to cover lost revenue, but you cant deduct lost revenue as a business expense. 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? In this case, she can deduct the business portion of these expenses by estimating the percent of time they will be used for business versus personal purposes (usually her time-space percentage). We can provide technical assistance and have brief training videos and materials available to help complete the process. 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. You can choose which method to use each year. Q: I gifted some of the grant back to parents because of COVID. CARES Act Provides $3.5 Billion in Child Care Relief. 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. Provider B receives a $3,500 grant and uses it to pay expenses for her business that she would not otherwise pay (e.g., extra employee wages, cleaning supplies, toys). K.4jq%E$ZT^:D+0mdEdUW#b=C\2CQ&j,AP5JRYMHj*6v)5oI DWH Q: I have been closed all year because of COVID and health issues that put me at high risk. Almost two-thirds of childcare centers are serving less than 75 children and are struggling to break even. All $20 million of the One-Time Supplemental Stabilization Grant funds was awarded in January 2022. What if I am on payroll with my staff? You can pay yourself with the EIDL loan. Or call the OCFS Stabilization Help Line: (844) 863-9319. child care, child and adult protective services, adoption, and child support services. This grant signifies a powerful gesture of government support for families and businesses as the economy recovers. A: You do not have to explain why you pay yourself and you dont need to show a loss. Q: If I use the grant for my IRA, can I deduct 100% of this on my taxes? Rates are reflective of the different costs associated with each program size. x][s8~OUNIS6MxJyzdS3 KY)13ed b6|0-Fiqaps7+y1;? Each state, territory, and tribe may further clarify eligibility requirements, but the federal eligibility parameters indicate that licensed, registered, and legally license-exempt center-based and home-based child care providers are eligible. It had to be decontaminated and repaired. Q: If I pay my assistant with the grant, do I still have to pay taxes on it? Phase two will include application, awarding, and issuing of funding. For further guidance on the tax implications of the Child Care Stabilization Grant, please contact your accountant or financial advisor. Q: Will getting this grant put me in a higher tax bracket? 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. chloe johnson peter buck wedding; le mal en elle fin du film Review the Instructions and Terms & Conditions prior to applying for each funding opportunity. A: I dont know. A: Yes, you can pay yourself any amount. 9EJH-E*!PPRs&-L\1%gh7XXjZ/ Are these expenses 100% business or time-space% deduction? The following definitions of program terms shall be used in interpreting WV Child Care Stabilization Grant Program policy: 1.1.1. Find Stabilization Grant Applications for your State or Territory. Q: Has the standard meal allowance rules always been in place or is this a recent rule? A: Some states have different rules about this. 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 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: Write out a note that says, November 20th, 2021 paid Fred Jones $2,000 in cash to paint my daycare. Try to get him to sign it. You cant count repairs if you use the standard mileage method, but you can count repairs if you use the actual expenses method. endobj 9857 et seq. See this from the AARP website. Keep in mind that all of these funds are taxable, so maintain records of how you . How to Use Child Care Stabilization Grant Funding to Support Your Home-Based Setting. Regarding federal tax rules, please contact your tax preparer or the Internal Revenue Service for guidance. 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. Is this correct? Q: On one slide it says that the PPP and EIDL programs are not taxable income. 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. A: No. If they are present 24 hours a day, five days a week, that represents 120 hours that you can count. 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! One extra snack per day, per child is an additional $202 deduction. 2023 BUILD Initiative. Are you saying this is not deductible? The NJ American Rescue Plan (ARP) Stabilization Grant is no longer accepting applications. 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. But you can pay yourself and then use that money to fund your IRA. Child Care Stabilization Grants Help Desk Support: 1-833-600-2074 [email protected] 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 Is this a deduction? Before the pandemic, there were approximately. Paying yourself involves nothing more than making a record indicating this. Mifflintown, PA 17059. Building Equitable Early Childhood Systems, Early Care & Education Quality Initiatives, Harnessing Opportunities for Positive Early Childhood (HOPE), The True Cost of Providing Safe Child Care During the Coronavirus Pandemic, Help is on the way! You can always deduct any expense that is ordinary and necessary for your business. Did this change? What dates matter for the child care stabilization grant? 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. A: You can use the grant money directly for these expenses. When childcare providers struggle, this creates a ripple effect in the economy when families cant get childcare. Q: We started adding more kitchen cabinets this summer. Help is on the way! You can use the grant money to pay yourself and then pay off the loan. The tax implications of the grants depend on several factors, namely, how the provider uses the funds, the providers household income, and possibly the state in which they live. If you will be pushed into a higher tax bracket if you take the money in 2021, you may be better off taking the money in 2022 when you will be in a lower tax bracket. This means you will pay some additional Social Security taxes, but it also means your higher profit will potentially increase your Social Security benefits. A: All non-profits should be filing a tax return, unless your preschool is owned by the children. b+hxG%YM8bjW8PePQj@Cx9]3Nl6jSx $ V}$%*Qfky.zL@)^f@H{rVKJ4@(TKjZKBa0JjDRP+fT9efu'yur B9f9xk!>m7"`TPhghw /'toK|yk.I/pI:2oK[zt#'.0+mlbxGSC! Q: Do I claim the same time-space% I used last year? A: Its a repair because you didnt remodel the entire kitchen by replacing just the cabinets. You will probably owe no more than 40% of the grant in taxes. Q: Is it better to pay myself with this grant or spend it on items for my business? Q: How can I build up my Social Security benefits before I retire when my profit has not been very high? Q: Is the Economic Injury Disaster Loan (EIDL) a Stabilization grant or is this a loan that must be repaid? A: No! Q: Can I claim my couch as a tax deduction if its used by my daycare children? Your state may or may not see this as a major improvement. Funding for the grants comes from the American Rescue Plan Act. This bill, based on President Biden's bold American Rescue Plan, provides $39 billion in desperately needed child care relief funding. A: No. Since you cant deduct these expenses on your 2021 tax return, youll owe taxes on the amount you apply to 2020 expenses. This could include fish, gerbils, rabbits, and so on. Q: Can I pay myself in one lump sum or do I have to pay myself weekly or biweekly? No other family income will be affected, meaning you wont pay higher taxes on any non-grant income.
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