Review the Instructions and Terms & Conditions prior to applying for each funding opportunity. Example 3: Provider uses some of the grant to pay herself and some for business expenses. ?y-|G1H3/_|/I'>_|!P,0ZE2:PTon_h How long do I have to stay in business if I receive stabilization grant funding? 3 0 obj Please call us at (315) 446-1220. You dont need to put it in the name of your business. A: If you pay your husband you must treat him as an employee and file the W-2, not a 1099. Programs that are awarded a grant will receive an IRS Tax Form 1099-NEC. Mifflintown, PA 17059. x][s8~OUNIS6MxJyzdS3 KY)13ed b6|0-Fiqaps7+y1;? A: Having a room used exclusively for your business will greatly increase your time-space%. A: You cannot deduct any costs associated with a dog or cat. Can I still receive the Stabilization grant? The NJ American Rescue Plan (ARP) Stabilization Grant is no longer accepting applications. Q: I refunded two weeks of care for a family that had to quarantine. Q: Would you need a separate account to pay yourself? How do I get the childcare stabilization grant? 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. 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. Find Stabilization Grant Applications for your State or Territory. A: You do not have to explain why you pay yourself and you dont need to show a loss. A: I dont know the answer for your particular state, sorry. A: I am sorry to hear this. Q: How to I calculate my Time Percent when children are in my care 24 hours a day? You can use it for free during a 30 day trial period. A: Maybe, depending on how much of the grant you dont spend on business items. These grants are in addition to other pandemic-related relief funds (e.g., CARES grants, Paycheck Protection Program loans, EIDL loans). %PDF-1.7 Can I still use the standard meal allowance rate or must they use the actual expense method? Q: Can I use this grant to pay myself? If you receive these funds, you will be mailed a 1099 form. 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. Contact your state to get the answer. Q: I moved my child care business out of my home into a separate building. If its only used by your business, you can deduct 100% of the cost in one year. As an employee stipend software company that specializes in tax compliance, Compt can serve as your trusted guide to help administer the grant money in the form of an employee stipend, while staying fully compliant with federal tax law. 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. $3,500 income $3,500 expenses = $0 taxable income and $0 taxes owed. Can I use the grant money for this or would have to pay myself first? Thats just how the law works, some are taxable, some are not. Child care stabilization grants were appropriated to states in the American Rescue Plan Act (Public Law 117-2) to help stabilize the child care sector via subgrants to child care providers due to the COVID-19 pandemic. A: An employee can work fewer hours and that wont impact the grant. I plan to discount the current family tuition evenly. Q: If I have staff can I still pay myself the whole amount? After September 30, 2022, no additional CCSG awards will be made. But, if you pay yourself, you can then use this money to purchase a home. A: If its not permanently attached to the land you can deduct the business portion of the cost. You will then report your wages as income. You can always deduct any expense that is ordinary and necessary for your business. California Stabilization Stipend. 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! If you cant get a clear answer from your state, you should pay yourself with the grant. 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. Example 1: Provider pays herself the full amount. What is the SC Building Blocks Grant? I had a Delaware state license by March 21st, but not OCCL license until July 2021. Paying for weekly house cleaner? 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. Tom Copeland: The Tax Implications of the Child Care Stabilization Grants 6,690 views Nov 15, 2021 86 Dislike Share Save usgovACF 12.3K subscribers This video identifies the benefits of the. Q: I understand I cant lower my employees wages, but what if the employee wants to work fewer hours? Q: Do I have to take out payroll taxes to pay myself if Im an LLC or does every provider who is not incorporated still have to deduct from the check before paying ourselves? Is the grant taxable income? This is clearly the case if you were receiving the lower Tier II reimbursement rate before July. A: You can include it either on line one (Gross receipts) or line six (Other Income). Using a reimbursement model, management and reporting is easy and takes the burden off your HR team. Q: Because of all my deductions I did not show a profit for three years. This webinar for training and technical assistance providers was presented on June 24, 2021. I thought it was seven years. Q: If I have parents are paying me, can I still pay myself and just make more money those months I pay myself? Supporting Centers in Preparing for Child Care Stabilization Grants You can use this amount with grant money. You will report this as income and pay Social Security/Medicare taxes as well as federal and state income taxes on this income. Please consult your tax professional, if you have an income tax questions or concerns. 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 A: You arent paying yourself for any particular hours you work. If you dont spend it all you will have to return the unspent money. Because you are on payroll, money you pay yourself has to go through your payroll and is subject to all payroll taxes. Access to safe and reliable child care is the backbone of our economy and essential for employees to get back to work. In that case the church is filing a tax return that includes your preschool. This blog explores the tax implications of the American Rescue Plan Act (ARPA) Child Care Stabilization Grants for Home-Based Child Care Providers. 3 0 obj This is not a loan. We have received grants from our city and our county. 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. Wuo|E&\ttPVcZ27-d#XH%{a_mTfP %bkTnwuB_k()JZ 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 1 0 obj Should I pay myself first with the grant money and then make payments on the vehicle? You should amend your 2020 taxes and report it as income and pay taxes on the amended return. Q: Can I get the grant even if I dont have any helpers? You can deduct all of the reimbursed meals and snacks as well as un-reimbursed meals and snacks. For further guidance on the tax implications of the Child Care Stabilization Grant, please contact your accountant or financial advisor. Are the grant funds taxable? A: No! Programs that are awarded a grant will receive an IRS Tax Form 1099-NEC. Q: My large vehicle that I use for business and personal purposes needs a new transmission. Q: We store a lot of our dcor and child care stuff in our attic. You can pay yourself with the EIDL loan. A: No. support provi ders unt i l June 2024. 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. p A: You cannot use the Stabilization grant to pay off a previous loan. CARES Act Provides $3.5 Billion in Child Care Relief. You will report less income in this situation, but you cant deduct anything that a parent owes you. There is not law that requires you to stay in business. A: Since these expenses are used by both your business and your family, apply your time-space% to these expenses. Almost. 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%? YGF:JKSj"tZO+rR&e ]ii D I A: EIDL is not the Stabilization grant. Ask your tax preparer to advise you. Q: Can I claim Social Security on my ex-husband? The application process and distribution structure varies from state to state, so check your local government website to confirm application deadlines and important dates. [1]This amount will depend on the state in which the provider lives. A: You can pay yourself as often and as much as you want. Our goal is to help your program become financially secure. 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. 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). A concrete slab in the backyard used for basketball, skating, etc.? The amount you pay yourself has nothing to do with how many hours you work or when you work. You dont have to if you dont want to. One extra snack per day, per child is an additional $202 deduction. Grant funding amounts and distribution schedule. The webinar was sponsored by Early Childhood Investigations. 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 . This income will not be the same as your food expenses. Q: You said we should only save our business records for three years. Help is on the way! 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 do, the amount that you lower your tuition is not tax deductible. I feel like its just more income I have to claim and pay taxes on. The purpose of STABLE is to respond to the urgent need to stabilize the child care sector in Georgia. Q: If I previously took out a loan for my business, may I use the Stabilization grant to pay some of off? % How am I doing that? Phase two will include application, awarding, and issuing of funding. 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? A: RI DHS aims to approve two stipends to all eligible providers, depending upon fund availability. No other family income will be affected, meaning you wont pay higher taxes on any non-grant income. Can I still deduct them as expenses? You cant deduct your mortgage payment, but you can deduct your Time-Space% of mortgage loan interest and you can depreciate your home to account for mortgage principal. A: The EIDL loan is not forgivable, you must pay it back over 30 years. This still leaves $2,100 for the provider to spend as she chooses (or save it). Q: I use my car for my business. If so, the corporation must pay you with the grant money through your normal payroll process which means paying payroll taxes. Are the C3 Child Care Stabilization grants taxable? If you are an employee, your employer is withhold Social Security/Medicare taxes and sending them on to Social Security quarterly. Or, will I need to show a loss? A: No! 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. Q: If I only have one child, can I still apply for the grant? Is this a home improvement or a repair? Q: If I was audited, would they just audit my grant or my entire business? Q: Does it matter how much income I made this year to use the Stabilization grant to pay myself? Child care providers that receive a grant have a reporting obligation on Form 1099-G if the amount is above $600. s,[[1c!yOOH-Nr A: Installing a new driveway or repairing it would both be considered a repair, not a home improvement. In general, every licensed or regulated provider is eligible. 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. Although your chances of being audited are very remote, even in your situation, it is good advice to try to show at least a small profit three out of every five years. 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. Can I put it on my 2021 tax return? Here are the government resources for the Child Care Stabilization Grant by state: The Child Care Stabilization Grant is part of the American Rescue Plan Act (ARP Act) (Pub.