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. Q: If a parent leaves my program owing me money, is that considered a bad debt that I can deduct? Are those grants considered taxable income? Q: We are a non-profit preschool facility in our church. Original URL . The Child Care Stabilization Grant is income to your business and is taxable by the state and federal government. Why does the child care stabilization grant matter? [-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 Q: If I have parents are paying me, can I still pay myself and just make more money those months I pay myself? If you receive these funds, you will be mailed a 1099 form. You can deduct your food expenses either using the actual expenses method ($68 in your example) or the standard meal allowance method. (wUu4JIvAcA:.*S5kL%4HSx gx(#-ZN(?o]Zmp onB={ 0,1 IU]MCU Using a reimbursement model, management and reporting is easy and takes the burden off your HR team. Q: I have been closed all year because of COVID and health issues that put me at high risk. Purchase of a swim spa for physical therapy, exercise, relaxation? As we all know, parents need access to safe, quality child care to get back to work. A: You can count all hours that you work in your home, either caring for children or doing other business activities. Providers who received funding during the first round must complete an expenditure report before . Q: On my grant report I listed mortgage and utilities as expenses. A: You should absolutely take it. These funds will help early childhood and childcare providers keep their doors open and continue to provide these essential services that are critical for a strong economic recovery and a more equitable future. Example 2: Provider uses full amount for business expenses Q: Are there any grants available to add on space to my home without getting a loan? Each state has its own guidelinescheck your local government website to confirm: Who is eligible and how to apply for the grant. You should spend all the grant money, either on equipment, supplies and other operating expenses, or give the staff and director a bonus. No. %PDF-1.7 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? 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? You just pay yourself because you are the owner. Q: Can I deduct the business portion of any item in one year regardless of the cost? You can deduct the amount you pay your assistant. Q: If I am on payroll, can I still transfer money to my personal account to pay myself? Stipulations for what the funds can be spent on and how to properly report them. Are you saying this is not deductible? Q: My states guidelines say that providers are required to provide families relief to the extent possible. For example, charging less tuition to assist parents. These grants are in addition to other pandemic-related relief funds (e.g., CARES grants, Paycheck Protection Program loans, EIDL loans). 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. Check with your state agency about this grant question. 2 0 obj You need to contact your state agency to get an answer. The Child Care Stabilization Grant is considered income and is taxable. 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? Q: I have remodeled my kitchen and bathrooms. Q: If I was audited, would they just audit my grant or my entire business? Q: Is it better to pay myself with this grant or spend it on items for my business? Can I use the grant to hire a clean-up crew? No! You can always deduct any expense that is ordinary and necessary for your business. Can I deduct this? 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: Can I claim Social Security on my ex-husband? A concrete slab in the backyard used for basketball, skating, etc.? 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: Can I get the grant even if I dont have any helpers? If the separate building is 40% of the size of the home, then deduct 40% of these costs. But, your city and county grants are taxable. If you cant get a clear answer from your state, you should pay yourself with the grant. A: No. Q: Does it matter how much income I made this year to use the Stabilization grant to pay myself? 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. A: If you are self employed, you are filing IRS Form 1040SE which calculates how much Social Security/Medicare tax you owe. 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. 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 . Q: Can I pay myself in a lump sum or spread it out weekly or monthly? 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? [1]This amount will depend on the state in which the provider lives. Yes. The same answer would be for a patio or driveway or any outdoor play space. A: You can deduct your Time-Space% of your utilities. A: No, you cant decrease wages or benefits to employees during the grant period. endobj A: You can use the grant money for all of these items. 2023 BUILD Initiative. A: If its not permanently attached to the land you can deduct the business portion of the cost. 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. With this funding the Illinois Department of Human Services continued the Child Care Restoration Grants (CCRG) and provided 6 rounds of CCRG grant funding from January 2021 - December 2022, providing over $6 million in relief funding to child care programs in Illinois. Painting is a repair. Did this change? Using grant money for 2020 has the same impact as paying yourself. And while many childcare providers have opened back up, its been anything but easy. 1 0 obj endobj If so, how do I do this? Q: My business is an S Corporation. Youll have to contact Social Security directly. Phase three will include the closeout process for these funds. There is not law that requires you to stay in business. C w5EgRQXM?O ?SUuoFt+$RAd})YT; u?P?Nrl8%Nq 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. 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. The utilities and internet are combined. Congress declared that these programs are not taxable income. Is this deductible? % If they are present 24 hours a day, five days a week, that represents 120 hours that you can count. A: You can use the grant money directly for these expenses. 4 0 obj A: Yes, deduct your time-space% of the cost in one year. Family child care providers must report any portion of the stabilization grant that they use to pay themselves as taxable income on their federal and state income tax return (unless their state chooses to make the grant not taxable). Using Child Care Stabilization Grant funds to pay federal taxes is not an allowable expense. Is this a home improvement or a repair? Do you advise doing this? 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. Are the C3 Child Care Stabilization grants taxable? See the funding breakdown by state, tribe, and territory, and more information about the grant on the. But, if you pay yourself, you can then use this money to purchase a home. 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 use my deck as an outdoor classroom due to COVID. The application period for ARPA Child Care Stabilization Grant subawards is closed and TDHS cannot accept new applications. This program doesnt just impact parents and childcare providers either. A: Colorado says they encourage providers to give 50% to parents. Q: If I give my staff a bonus am I doing it through payroll? The application process and distribution structure varies from state to state, so check your local government website to confirm application deadlines and important dates. Supporting Family Child Care to Prepare for Child Care Stabilization Grants, Help is on the way! Discounts, scholarships and refunds are not tax deductible. A: I assume you are on payroll because you are being treated as employee of a corporation. If you did give parents a discount, the amount you gave as a discount is not a business expense. 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? I feel like its just more income I have to claim and pay taxes on. 9EJH-E*!PPRs&-L\1%gh7XXjZ/ You can deduct the business portion of other animals that you incorporate into learning activities with the children. Can I add the attic space in my time-space% calculation? These funds give them a lifeline at the perfect time. A: If you are incorporated and are being treated as an employee of your corporation, then the corporation will report the grant as income. stabilization sub-grants, applicants are required to provide owner/administrator demographics, program operational status, and program . One extra snack per day, per child is an additional $202 deduction. However, even if it does push you into a higher tax bracket, it only means you will pay more in taxes on the grant amount that is in the higher tax bracket. Like if something happens and you have close or choose to close. This could include fish, gerbils, rabbits, and so on. A: Only if you already have a post-secondary degree. Once you apply, you will be told how much you will get. A: No. A: Pay yourself first. I plan to discount the current family tuition evenly. 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.. You must treat people who help you care for children as your employees, subject to all the payroll taxes. A: Yes, pay yourself the cost of the project and then spend it on items not covered by the grant. How long do I have to stay in business if I receive stabilization grant funding? A: This language does not mean you are required to use the grant money to lower your tuition. What dates matter for the child care stabilization grant? You should amend your 2020 taxes and report it as income and pay taxes on the amended return. No. Providers who received an initial disbursement will receive email notifications via NJCCIS when they are eligible to recertify, this process will begin in December 2022. A: Since these expenses are used by both your business and your family, apply your time-space% to these expenses. 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. Each state will determine how much a provider will receive based on a criteria they have developed. Q: I replaced the flooring in my kitchen. A: You cant use grant money to pay someone who is not treated as your employee. 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." 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. A: If you are self employed, look to see if you file IRS Form 1040SE. The purpose of the guidance is to help states quickly distribute the stabilizations funds to protect and support the existing child . 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. A clean-up crew you need to contact your child care stabilization grant taxable agency about this grant question taxable income will be told much... Business expense need to contact your state agency about this grant or entire! On items not covered by the grant period if they are present 24 a. The current family tuition evenly providers either providers who received funding during the first round complete! Grants, Help is on the amended return items for my business being treated as your employee my. 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