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. Q: I moved my child care business out of my home into a separate building. Q: If I dont use receipts to calculate my food expenses, isnt the calculation a wash? You should amend your 2020 taxes and report it as income and pay taxes on the amended return. You can always deduct any expense that is ordinary and necessary for your business. Below is an additional series of questions and answers about the Stabilization Grant. 9857 et seq. Can I add the attic space in my time-space% calculation? If you dont spend it all you will have to return the unspent money. Are you saying this is not deductible? NOTE: Child Care Stabilization Grant payments may be taxable. The application process and distribution structure varies from state to state, so check your local government website to confirm application deadlines and important dates. Q: How are my wages reported to Social Security? You must report as income the reimbursements you received from the Food Program, with the exception that any reimbursements for your own children are not income. Or call the OCFS Stabilization Help Line: (844) 863-9319. If you do so, this will help support the work I do helping family child care providers be more successful as a business. We are planning on finishing the kitchen after the first of the year by replacing the old cabinets. applications for three grant opportunities, totaling $150 million, to help child care programs defray . Minnesota child care providers were able to apply for these grants as part of their January 2022 Child Care Stabilization Base Grant application. Where to find more information That said, if a provider is receiving other public benefits based on income eligibility (e.g., health benefits, tax credits, student financial aid) and this grant increases their taxable income to a level that will make them no longer eligible for those benefits, they may need to look very closely at the cost versus the benefit of receiving a stabilization grant. K.4jq%E$ZT^:D+0mdEdUW#b=C\2CQ&j,AP5JRYMHj*6v)5oI DWH Stabilization Grants This is clearly the case if you were receiving the lower Tier II reimbursement rate before July. Q: Where does the grant go on Schedule C? A: Colorado says they encourage providers to give 50% to parents. s,[[1c!yOOH-Nr A: Yes. 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: The standard meal allowance rate has been in effect since 2003. Is the grant taxable income? For most providers, this would be about 30-40% in taxes. If you are an employee, your employer is withhold Social Security/Medicare taxes and sending them on to Social Security quarterly. Example 2: Provider uses full amount for business expenses Can I still use the standard meal allowance rate or must they use the actual expense method? Therefore, its not a good idea to pay your husband. Q: How to I calculate the percentage of mortgage payments? Report as income, the amount you received from parents. Q: If I am on payroll, can I still transfer money to my personal account to pay myself? 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). See the funding breakdown by state, tribe, and territory, and more information about the grant on the. A: Count the entire room as regularly used as a daycare storage room. Can I still deduct them as expenses? 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. But, they will reduce your federal and state taxable income. These funds give them a lifeline at the perfect time. Important note: Although there is federal guidance on how the Stabilization grants are to be administered, each state may interpret this guidance slightly differently. Q: Can I use the Stabilization grant to purchase a home? 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. The Child Care Stabilization Grant is income to your business and is taxable by the state and federal government. Subsidized Child Care Stipends. But you can pay yourself and then use that money to fund your IRA. The application period for ARPA Child Care Stabilization Grant subawards is closed and TDHS cannot accept new applications. Regarding federal tax rules, please contact your tax preparer or the Internal Revenue Service for guidance. When childcare providers struggle, this creates a ripple effect in the economy when families cant get childcare. Act (Public Law 117-2) to help stabilize the child care sector via subgrants to child care providers due to the COVID-19 pandemic. 2 0 obj 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 Q: We started adding more kitchen cabinets this summer. <>/Metadata 1131 0 R/ViewerPreferences 1132 0 R>> x][s8~OUNIS6MxJyzdS3 KY)13ed b6|0-Fiqaps7+y1;? The government has taken notice, and their answer is The Child Care Stabilization Grant, part of the American Rescue Plan Act (ARPA). She may keep the funds in the bank account as an emergency fund for later use or she can spend it as she wishes. 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 a neighbor to paint my daycare with cash, how can I record this as an expense? It is also important for providers to know that not all business expenses are fully tax deductible. The corporation can deduct your wages and payroll taxes. Phase two will include application, awarding, and issuing of funding. Q: I use my deck as an outdoor classroom due to COVID. Stipulations for what the funds can be spent on and how to properly report them. 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. Discounts, scholarships and refunds are not tax deductible. In this blog, Damaris Alvarado-Rodriguez explains the strategies she uses to compensate ECE professionals in the manner they deserve. A new 1099-NEC form for reporting non-employee compensation was introduced by the IRS for 2020. Thats just how the law works, some are taxable, some are not. The NJ ARP Stabilization Grants range from $30,000 to $120,000 for licensed child care centers, depending on license capacity, provider type and monthly expenses. Using grant money for 2020 has the same impact as paying yourself. If he did not, have him amend your tax return and not charge you for doing so, since it was his mistake. A: No! [-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: You said we should only save our business records for three years. You will probably owe no more than 40% of the grant in taxes. Can I use the grant money for these expenses? Take a before and after picture of the area he painted. Q: You said I could offer employees a one-time bonus. A: No, you cant use the grant money for these major improvements. Yes. Should I pay myself first with the grant money and then make payments on the vehicle? Program Amount A: If you pay your husband you must treat him as an employee and file the W-2, not a 1099. How do I figure the deductions? When will I be notified of the new monthly grant amount that is effective October 1, 2023? A: Depends on what your state says. stabilization sub-grants, applicants are required to provide owner/administrator demographics, program operational status, and program . 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. Is this a deduction? <> Q Im receiving this grant quarterly through April 2023. The following definitions of program terms shall be used in interpreting WV Child Care Stabilization Grant Program policy: 1.1.1. 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 So, this is not a requirement in Colorado. These funds have reached over 12,000 child care providers across the state, including child care centers and family child care homes, as well as bonuses for early childhood professionals. Example 3: Provider uses some of the grant to pay herself and some for business expenses. Programs that are awarded a grant will receive an IRS Tax Form 1099-NEC. $3,500 income $3,500 expenses = $0 taxable income and $0 taxes owed. COVID-19 Child Care Stabilization and Recovery Grants. 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. Q: If I pay myself, how much will I owe in taxes? You will report less income in this situation, but you cant deduct anything that a parent owes you. Q: In my state the grant money can be used to reimburse expenses back to February 2020. Q: I gifted some of the grant back to parents because of COVID. You can use it for free during a 30 day trial period. A: The PPP and EIDL programs are administered through the Small Business Administration. A: The cost of any item that is used exclusively for your business can be deducted 100%. 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. A: No, because paying yourself does not create a deduction. 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