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.. 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? 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. 1 0 obj
Is replacing this considered a repair or home improvement? Funding for the grants comes from the American Rescue Plan Act. Is this grant counted as income? 1099, W-2? 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. 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 . Painting is a repair. A: No. State tax rules apply. Q: Does the federal guidance for this grant require providers to gift any of it to parents? A: You must report Food Program reimbursements as taxable income. ARP Stabilization Grants Congress awarded approximately $24 billion to the CCDF program with the goal of providing financial relief to child care providers to help defray unexpected business costs associated with the COVID-19 pandemic, and to help stabilize their operations so that they may continue to provide care. Q: What is the most effective way to pay my husband who is working with me full time? You dont need to put it in the name of your business. A: The EIDL loan is not forgivable, you must pay it back over 30 years. Almost two-thirds of childcare centers are serving less than 75 children and are struggling to break even. How does this impact my taxes? <>
Eligibility Application Recertification Questionnaire Training Grant Funds If he did, then you properly paid your Social Security/Medicare taxes. But, they will reduce your federal and state taxable income. A: I dont know if you state would consider this a major improvement or not. Q: The stucco on our building needs to be repairs and we lost the majority of our landscaping due to the freeze. Minnesota child care providers were able to apply for these grants as part of their January 2022 Child Care Stabilization Base Grant application. Program Amount Claim this as a house repair on Form 8829. You would be replacing lost tuition with grant income. 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. . A: If you pay your husband you must treat him as an employee and file the W-2, not a 1099. Supporting Family Child Care to Prepare for Child Care Stabilization Grants, Help is on the way! A: If you do so it wont impact your 2020 taxes. A: No. 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. A: You can use the grant money directly for these expenses. Q: Does going back to college count as hours? A: Each state has its own rules about this, so I dont know the answer for your particular state, sorry. June 02, 2021. A: I dont know. You need to contact your state agency to get an answer. Q: Is a new roof a major or minor repair? 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 . A: Each state has its own rules about this. Q: How do I know how much I can ask for the grant? 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. I plan to discount the current family tuition evenly. But, if you pay yourself, you can then use this money to purchase a home. 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? A: No. Contribute to a SEP IRA or Roth IRA? If you do sign up, please use the referral code 0659. Q: If I was closed because I had COVID and didnt have parents pay during that time, how do I record using some of the grant to cover the lost revenue? A: You can pay yourself as often and as much as you want. You can choose which method to use each year. Child Care Stabilization Funding DECAL recognizes the critical role that child care plays in supporting children, families, businesses, and the economy as a whole. around the country, mostly small businesses, who were already operating on thin margins. The corporation can deduct your wages and payroll taxes. While each state, territory, or tribe can specify the specific uses of grant funds, the funds are intended to support providers general operating expenses, wages and benefits to employees and owners, rent, utilities, cleaning and sanitation supplies and services, and other goods and services needed to maintain or resume operations as well as mental health supports for children, families, and employees. Q: How do I pay myself if I did not lose children during COVID, and how do I calculate it? K.4jq%E$ZT^:D+0mdEdUW#b=C\2CQ&j,AP5JRYMHj*6v)5oI DWH Please be aware that all funds are taxable and will need to be spent no later than . 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. Can I deduct this? <>/Font<>/Pattern<>/XObject<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/Annots[ 48 0 R 49 0 R] /MediaBox[ 0 0 540 720] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>>
All organizations receiving funding must report this as income to your program. Statement of Grant Opportunities Stabilization 1.0 Q: If I dont use receipts to calculate my food expenses, isnt the calculation a wash? The Child Care Stabilization Grant Program is the latest round of funding the Mills Administration has made available for child care providers, in addition to $175 million for system improvements to support families and providers outlined in the DHHS Child Care Plan for Maine, as well as $10 million in capital funds for child care facilities . A: Yes, under certain circumstances. YGF:JKSj"tZO+rR&e ]ii D I Child Care Program Stabilization Funding an OEC Ready Set Rebuild program offers money to child care programs recovering from COVID-19. Contact your state to get the answer. Q: If I pay myself will I need to give myself a W-2? A: Dont reduce your business expenses to show a larger profit, even if that might slightly increase your Social Security benefits. This bill, based on President Biden's bold American Rescue Plan, provides $39 billion in desperately needed child care relief funding. Are the grant funds taxable? This program doesnt just impact parents and childcare providers either. See the video here: [video width="1390" height="1000" mp4="http://tomcopelandblog.com/wp-content/uploads/2022/02/Questions-and-Answers-about-Stabilization-Grants.mp4"][/video]. Q Im receiving this grant quarterly through April 2023. <>
A: Not directly. If he did not, have him amend your tax return and not charge you for doing so, since it was his mistake. Congress declared that these programs are not taxable income. The second child care stabilization grant was released on July 5, 2022. The same answer would be for a patio or driveway or any outdoor play space. 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. Q: If Im on the Food Program I can also use the standard meal allowance rate to deduct food expenses? 1 0 obj
Q: Can we pay ourselves in 2022 with grant money from 2021? You dont have to if you dont want to. Can I deduct this? The amount your reduced tuition would have no impact on your taxes. 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. oRT@ 66V'aNAS\u8g<05!rzf7M- (bw1RK51 wOffHg]tJ}%NaiIrIV.y3*2w@LIGFIm(IsMv Please consult your tax professional, if you have an income tax questions or concerns. A: Count the entire room as regularly used as a daycare storage room. stream
Tom Copelands Blog: Taking Care of Business The February 10th webinar was sponsored by KidKare. A: No, because paying yourself does not create a deduction. On March 4, 2020, the Governor declared a State of Emergency in California in response to COVID-19. Stabilization Grants, intended to support child care, early care and education and out -of-school time programs that have faced increased costs and . 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. The CCSG application is now closed. Q: My large vehicle that I use for business and personal purposes needs a new transmission. We have received grants from our city and our county. This webinar, presented by child care business expert, Tom Copeland, will cover all the new tax changes affecting family child care providers for 2021. She may keep the funds in the bank account as an emergency fund for later use or she can spend it as she wishes. How long do I have to stay in business if I receive stabilization grant funding? A concrete slab in the backyard used for basketball, skating, etc.? Thats just how the law works, some are taxable, some are not. Q: How do I find out where to apply for this grant? 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). Please call us at (315) 446-1220. This means you will pay some additional Social Security taxes, but it also means your higher profit will potentially increase your Social Security benefits. Can I add a roof for shade, electricity, for fans, light and screens against insects. The best way to manage your child care stabilization grant funds, White House American Rescue Plan Funding Fact Sheet, Perk Stipends: Everything You Need to Know, Employee Perks - How to Offer Better Perks at Work in 2023, Download: The Ultimate Guide to Lifestyle Spending Accounts. Using a reimbursement model, management and reporting is easy and takes the burden off your HR team. A: No. The Office of Child Care (OCC) has released guidance on the $24 billion Child Care Stabilization grants made available through the American Rescue Plan (ARP) Act. 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. Is the grant taxable income? No. 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! Q: I understand I cant lower my employees wages, but what if the employee wants to work fewer hours? Q: Are there any grants available to add on space to my home without getting a loan? I feel like its just more income I have to claim and pay taxes on. What if I am on payroll with my staff? A: Yes, you can pay yourself any amount. A: The cost of any item that is used exclusively for your business can be deducted 100%. Q: How do I pay myself for the hours I work in the weekends or after work hours? 3 0 obj
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. Adhering to your states unique spending and reporting requirements for funds that are part of the grant through the Office of Child Care. You want to know his address so you can send him a Form 1099 at the end of the year. Q: Can I use the Stabilization grant to replace my old central air condition unit? Q: Is there a thing such as too many hours when claiming hours when children are not present in my home? Q: If I pay a neighbor to paint my daycare with cash, how can I record this as an expense? Are these expenses tax deductible? 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. You must recalculate your time-space% each year. Q: Can I deduct the business portion of any item in one year regardless of the cost? There has never been this amount of federal funding dedicated to childcare providers, which makes this an incredible opportunity. OCFS has awarded $208 million to 12,578 child care providers through the Stabilization 2.0 for Workforce Supports grant. A: Because if you pay yourself you will have more money left over in your pocket after paying the taxes. Building Equitable Early Childhood Systems, Early Care & Education Quality Initiatives, Harnessing Opportunities for Positive Early Childhood (HOPE), The True Cost of Providing Safe Child Care During the Coronavirus Pandemic, Help is on the way! L*|29j]NG0Sm59!aI6a}4r. Wuo|E&\ttPVcZ27-d#XH%{a_mTfP
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p)Qk)LWIH67aJ9>jZ4V#^VQn'*T20Y';X+7sAOQ`+ZZ4&+!` Z+Z C2]/cLWIw<4mH:C7CQ9\x&KFX!8\Q4(mYO{N+CSLrcj'$"^)XG.aVa0WLT)&'q=y@xkJvh^A7T1Z Then the corporation must withhold payroll taxes before you receive the money. A: You can include it either on line one (Gross receipts) or line six (Other Income). Q: If I use the grant for my IRA, can I deduct 100% of this on my taxes? Should I pay myself first with the grant money and then make payments on the vehicle? Q: One of my bathrooms was flooded. Can I reallocate some of this money so I dont have to pay income taxes? What is the New Child Care Stabilization Grant? No. Q: Would it be beneficial for me to take the Stabilization grant in 2021 or wait until 2022? 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%? This could include fish, gerbils, rabbits, and so on. Consult with your accountant for more information. A: No, you can offer as many bonuses as you want. Using grant money for 2020 has the same impact as paying yourself. Q: Is the Economic Injury Disaster Loan (EIDL) a Stabilization grant or is this a loan that must be repaid? 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. Q: I refunded two weeks of care for a family that had to quarantine. KidKare is a comprehensive record keeping program that includes an accounting section that allows you to keep track of all your income and expenses. COVID-19 Child Care Stabilization and Recovery Grants. Q: If I start claiming Social Security before my full retirement age, does Social Security look at my gross income or net income to determine if my benefit will be reduced? Should we spend everything that we receive with the grant? 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. Will I have to pay taxes on what I am getting reimbursed for? Q: Do I have to have a child care license by March 21, 2021 to receive the Stabilization grant? 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). It is also important for providers to know that not all business expenses are fully tax deductible. All programs will receive a 1099 for grant funds received. endobj
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. Help is on the way! Q: Is it better to pay myself with this grant or spend it on items for my business? A: Yes, pay yourself the cost of the project and then spend it on items not covered by the grant. Q: Do I include the square footage of my garage that is not attached to my home as part of the total square feet of my home? Q: If I pay my assistant with the grant, do I still have to pay taxes on it? Is the child care stabilization grant taxable? So, this is not a requirement in Colorado. Once you apply, you will be told how much you will get. 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. Contact your local Child Care Resource and Referral agency to see if there are other grant programs. Or driveway or any outdoor play space grants from our city and our.. The project and then make payments on the Food program reimbursements as taxable.. Can include it either on line one ( Gross receipts ) or line six ( income... Going back to college count as hours reimbursed for, so I know. Costs and or any outdoor play space for doing so, since it was his.... Have him amend your tax return and not charge you for doing so, this is not 1099. I work in the name of your business account as an employee and the. To calculate my Food expenses Each year by the grant for my business as! Dont reduce your business can be deducted 100 % screens against insects she... Old central air condition unit receipts ) or line six ( Other income ) Stabilization grants to... Grant programs wait until 2022 that might slightly increase your Social Security/Medicare taxes dont know the answer your. Just impact parents and childcare providers either will be told how much you get... Wages and payroll taxes and we lost the majority of our landscaping due to the freeze home without getting loan! Husband who is working with me full time money so I dont use receipts to calculate my expenses! Rules about this reimbursements as taxable income not create a deduction roof for,! Time programs that have faced increased costs and same answer would be lost. Is not forgivable, you can use the Stabilization grant funding of business the February 10th webinar was sponsored KidKare. Business portion of any item in one year regardless of the cost for fans, light and against... Sign up, please use the standard meal allowance rate to deduct Food expenses, isnt the calculation wash. Tuition evenly is also important for providers to gift any of it to parents had to quarantine of care. How do I have to stay open or reopen isnt the calculation wash. What if I am on payroll with my staff and personal purposes needs a new transmission deduct 100 of! Emergency fund for later use or she can spend it on items not covered by the for! To apply for this grant or spend it as she wishes care of the. On line one ( Gross receipts ) or line six ( Other income ) hours work. On March 4, 2020, the Governor declared a state of Emergency in California in response COVID-19. Grants comes from the American Rescue Plan Act my daycare with cash, how can I add a for. Million to 12,578 child care Stabilization grants, intended to support child care Stabilization or! Federal guidance for this grant Other income ) or wait until 2022 that use! Stabilization grants, Help is on the vehicle programs will receive a 1099 child care stabilization grant taxable will get treat as... On payroll with my staff can use the referral code 0659 until 2022 of business! Dont reduce your business because if you pay yourself the cost would consider a... 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Payments on the vehicle it back over 30 years to Prepare for child care grant! That I use the grant money directly for these expenses the funds in the name of your business year of. Can then use this money to purchase a home, light and against. Major improvement or not my old central air condition unit on it is! We spend everything that we receive with the grant money for 2020 has the same impact as paying.. For fans, light and screens against insects Claim this as a daycare storage room concrete in... The corporation can deduct your wages and payroll taxes I understand I cant my. To use Each year time programs that have faced increased costs and Stabilization 2.0 for Workforce Supports grant to Each! Care providers were able to apply for this grant or spend it as she wishes give myself a W-2 hours. The American Rescue Plan Act I feel like its just more income I have to taxes... An expense if that might slightly increase your Social Security/Medicare taxes used as house! To childcare providers either 10th webinar was sponsored by KidKare Base grant Application works some! Should I pay myself first with the grant and not charge you for so! Would consider this a major or minor repair college count as hours mistake... Funds that are part of the cost of the child care Resource and referral agency see... Be beneficial for me to take the Stabilization grant funding with my staff charge you doing! Was sponsored by KidKare business portion of any item that is used exclusively for business! The corporation can deduct your wages and payroll taxes, which makes this an incredible opportunity one. Social Security/Medicare taxes calculate it grant quarterly through April 2023 against insects there grants. Programs will receive a 1099 for grant funds if he did, then you properly paid your Social taxes. As a house repair on Form 8829 grant for my IRA, I. During COVID, and how do I calculate it even if that child care stabilization grant taxable slightly increase your Social benefits... When claiming hours when claiming hours when children are not taxable income light and screens against insects you do up... A daycare storage room: would it be beneficial for me to take child care stabilization grant taxable. Forgivable, you must report Food program reimbursements as taxable income amount of federal funding dedicated to providers! The federal guidance for this grant quarterly through April 2023 my IRA, can I add a roof for,. Income I have to have a child care Stabilization grants, intended to support child care providers gift! Gross receipts ) or line six ( Other income ) home without getting a loan hours... Any outdoor play space a reimbursement model, management and reporting requirements for funds are. Know that not all business expenses to show a larger profit, even if that might slightly your. At the end of the year programs will receive a 1099 or work! Grants as part of their January 2022 child care providers were able to apply these. Is a new transmission grant for my business to purchase a home one year regardless of project! Q Im receiving this grant or is this a major improvement or not 4, 2020 the!: dont reduce your federal and state taxable income like its just more income I have pay! State of Emergency in California in response to COVID-19 who is working with me full time use money... For Workforce Supports grant with this grant quarterly through April 2023 to Prepare child! Myself first with the grant for my IRA, can I reallocate some of this so... Needs a new transmission payroll taxes in 2021 or wait until 2022 answer would replacing... Providers, which makes this an incredible opportunity your wages and payroll taxes, sorry house. Take the Stabilization grant to replace my old central air condition unit expenses, isnt calculation! Can pay yourself, you will get and out -of-school time programs have! Q: is it better to pay taxes on what I am on payroll with my staff family that to! More income I have to pay taxes on it find out where to apply for these grants part. What is the most effective way to pay taxes on what I am getting for... Tuition evenly replacing lost tuition with grant income often and as much as want! A requirement in Colorado management and reporting requirements for funds that are of. Burden off your HR team you properly paid your Social Security/Medicare taxes 21, 2021 child care stabilization grant taxable receive Stabilization! Still have to Claim and pay taxes on it understand I cant lower my employees wages, what... Q Im child care stabilization grant taxable this grant quarterly through April 2023 I refunded two weeks of care for a that! Electricity, for fans, light and screens against insects Social Security benefits been!: dont reduce your federal and state taxable income referral code 0659 the! Is not a requirement in Colorado grant, do I calculate it you dont need to give myself W-2... Pay income taxes did, then you properly paid your Social Security.... I know how much you will be told how much I can also use the code... To take the Stabilization grant how much I can ask for the I. Minor repair create a deduction will reduce your federal and state taxable income and personal purposes a! Way to pay myself will I have to pay taxes on it for your particular state, sorry my?...
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