child care stabilization grant taxable

You may view payment status by logging in. The federal guidance says you should give parents tuition relief, to the extent possible. This is not a requirement. Child Care Relief Funds. Tribal lead agencies may determine which provider types to include in their stabilization subgrant programs, as long as those providers are eligible and qualified as defined in the ARP Act. Tribal lead agencies should develop a process to verify the assurances while collecting the information to report on use of funds and data elements about the subgrants and subgrant recipients. Regarding federal tax rules, please contact your tax preparer or the Internal Revenue Service for guidance. Yes, tribal lead agencies may use ARP Act stabilization funds for an existing multiyear construction project. Tribal lead agencies may use CCDF funds from more than one funding stream (i.e., Mandatory, Discretionary, Supplemental, or stabilization funds) to fund a construction or major renovation project, as indicted in their application for construction or major renovation (. Within the grant attestation, a provider attests to using the funds for only items in the allowable expenditure categories. Topics include How to prepare for the grant application. Programs will be prompted (via email and in LEAD) to recertify the application on the first day of the month they are recertifying. A provider does not have to be serving a child eligible for CCDF in order to be considered as meeting CCDF requirements. The two components are intended to grant early care and learning programs funds to facilitate high quality early childhood education at its true cost and increase compensation to staff. Q: Can I use the Stabilization grant for: Pay my employees life insurance premiums? There are two payment options: If an organization has more than one Massachusetts location, am I eligible to receive more than one grant? Lead agencies may choose to contract with intermediaries, such as counties, child care resource and referral agencies, and staffed family child care networks, to manage the administration of the ARP Act stabilization subgrants. More information is available from theWhite House American Rescue Plan Funding Fact Sheet. Please be aware that all funds are taxable and will need to be spent no later than . It would be reasonable, for instance, for Lead Agencies to prioritize services for, or even restrict eligibility to, families with children who are unable to attend school in person because of closures or health reasons over families with children who are able to attend school in person, but opt not to. 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 business gross income. 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. How do I get the childcare stabilization grant? The PowerPoint from the training sessions can be found on the EEC website under the Resources section: The feedback will only be used for improving the website. A: State applications will often use the word personnel when describing what the grant can be used for. Is there a deadline for spending this funding? It would also be allowable for the Lead Agency to use CCDF quality dollars to provide grants to impacted child care providers to improve quality and/or maintain the supply of child care. Therefore, there must be a connection to non-parental child care in order to use CCDF funds. A: You cant use grant money to pay someone who is not treated as your employee. This blog explores the tax implications of the American Rescue Plan Act (ARPA) Child Care Stabilization Grants for Home-Based Child Care Providers. Tribal lead agencies may use CCDF funds from more than one funding stream (i.e., Mandatory, Discretionary, Supplemental, or stabilization funds) to fund a construction or major renovation project, as indicted in their application for construction or major renovation (https://www.acf.hhs.gov/occ/policy-guidance/tribal-construction-or-major-renovation). Funds can be used for this purpose under "goods and services". Ready to apply? Lead Agencies have the option to waive the income eligibility requirements for children who receive (or need to receive) protective services, if determined to be necessary, on a case-by-case basis. FAQs under this heading discuss stabilization subgrants and supplemental funding in relation to Tribal-specific flexibilities. Therefore, if you received a $10,000 grant and paid $4,000 in taxes, you would still have $6,000 left over after paying the taxes. The CRRSA Act funds are silent to the obligation and liquidation periods. We encourage family child care providers to contact a tax advisor about what should and should not be reported as part of ones AGI. Note: the Office of Child Care is issuing this FAQ to lead agencies due to the time sensitive nature and urgency with ensuring that Americans can access the COVID-19 vaccine. pdf Child Care Restoration Grants Funding Summary . This only applies to Tribal CCDF Plans and not to tribes with approved Public Law 102-477 Plans. Then put aside some money in a place that is low risk (bank savings account, short-term bond fund or money market account). A: The Child Care Stabilization Grant consists of: program amount + workforce amount + add-ons. Therefore, you would need to file 1099-Gs to avoid penalties for failure to file (Internal Revenue Code Section 6721) or failure to furnish (6722). Legal non-licensed providers were not eligible for One-Time Supplemental Stabilization Grants. Payments from child care stabilization funding should generally be reported as income. Learn about provider eligibility for the COVID-19 vaccination. She can deduct these expenses from the taxes she owes, so she will not owe additional taxes if she receives the grant. She can pay herself this by noting the payment in her bank records or check register as stabilization payment for myself, for example. A policy that moves families currently receiving subsidies to a waitlist is in direct opposition to the graduated phase-out policy. Tom Copelands Blog: Taking Care of Business The Expenditure Tracker is a template to help track the purchases/payments made using grant award funding. 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. In an effort to properly balance these interests, consistent with statutory and regulatory restrictions on the use of CCDF for school, we offer the following: A CCDF Lead Agency has the option to use CCDF to pay for tutoring or academic support services, but only if meeting all of the following conditions: Yes, electronic equipment is an allowable use under CCDBG as an activity to improve the quality of center-based, home-based, or in home child care services provided for school-aged children (45 CFR 95.53(a)(10)). When and where will a copy of the slide deck from the C3 training sessions be available? for administration, supply building, and technical assistance. Lead agencies may define what it means to be regulated or registered in the state, territory, or tribe. ACF seeks to support working families with quality child care options for children of all ages and socio-economic backgrounds that encourage learning in a safe environment while ensuring that that program resources are not duplicative of services provided by other entities, such as schools. Funds are distributed directly from your state via the Office of Child Care and, if all of your states spending and reporting requirements are met, there is no requirement to repay funds. FAQs in this category focus on questions about how to implement subgrant programs and allowable uses for these funds by the provider. American Rescue Plan Act (ARPA) Child Care Stabilization Grant Opportunity. Share sensitive information only on official, secure websites. Lead agencies have the discretion to decide which child care providers are included in their ARP Act stabilization subgrant programs. As this requirement applies to the date of application, a school-age program that is closed during the summer would be eligible for a subgrant if the program applied for the subgrant when it opened again to provide child care services, such as in the fall when school reopens. The terms included in the Act are broad, and lead agencies have the flexibility to define them. 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. Child care providers also may not involuntarily furlough employees employed on the date of submission of the application. Programs that are awarded a grant will receive an IRS Tax Form 1099-NEC. Can this include replacing lost income due to low enrollment? (45 CFR 75.2Visit disclaimer page), Child care stabilization subgrants included in the ARP ActVisit disclaimer page are benefits to a child care provider and are considered payments made to beneficiaries of a federal program, which is the same as with child care subsidies paid under the voucher program. Contact your state for the answer. Regarding federal tax rules, please contact your tax preparer or the Internal Revenue Service for guidance. All CCSG providers approved for the award between July 2021 and September 30, 2022 will be paid monthly through June 2023. The ARP ActVisit disclaimer page requires providers to certify that they will provide relief from copayments and tuition payments for the families enrolled in the providers program, to the extent possible, and prioritize such relief for families struggling to make either type of payment (emphasis added). The Child Care and Development Block Grant (CCDBG) Act requires lead agencies to allow for provision of continued assistance for families whose income exceeds the initial eligibility threshold but is below the second tier. While the guidance in this response focuses on how ARP stabilization funds impact the eligibility of child care workers for federal benefit programs, the same guidance would apply to funding from regular CCDF funds and supplemental funds provided under the CARES Act, CRRSA Act, and ARP Act, when the funds are used as stabilization grants or similar provider grants/stipends. What is the difference between a major renovation and minor building updates or maintenance? Q: What impact will receiving this grant have on my Social Security benefits? All programs will receive a 1099 for grant funds received. I feel like its just more income I have to claim and pay taxes on. Example 3: Provider uses some of the grant to pay herself and some for business expenses. The CCDBG Act references children who need to receive protective services, demonstrating that the intent of this language was to provide services to at-risk children, not to limit this definition to serve children in the child protective services system. No, a budget is not required as part of the application. Q Im receiving this grant quarterly through April 2023. Any funds received after the date of permanent closure will need to be returned to EEC. Private information such as social security information, home addresses of employees, fingerprint records, drivers license numbers, medical information, credit card information, bank account numbers of employees, etc. Lead Agencies are permitted to use funds for the establishment and maintenance of computerized child care information systems, including data systems. State, Territory, and Tribal Lead Agencies have broad flexibility to operate the CCDF program and have a number of options within federal statute and regulation to adapt policies in order to maintain continuity of services for families affected by a disaster. Funded by supplemental Child Care Development Block Grant funds through the American Rescue Plan Act (ARPA), this opportunity is intended to help stabilize the cost of maintaining child care programs by supporting the child care workforce, reducing the financial burden of child care for families and ensuring a safe and healthy environment. KidKare is a comprehensive record keeping program that includes an accounting section that allows you to keep track of all your income and expenses. 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. Programs should contact an accountant or tax professional to understand more about their particular tax situation and how this guidance applies to their specific business. Welcome to the Child Care Stabilization Grant Application System! There is also not a federal limit on the total dollar amount of stabilization subgrants that a qualified provider can receive. Information about stabilization grants including policy guidance, a timeline, and frequently asked questions. OCC will not consider construction or major renovation applications for facilities that do not provide direct child care services to children. Because efforts to increase access to licensing are considered a supply building activity, funds from this set-aside could be used to create a child care licensing department for the tribe. The ARP Act does not impose requirements on whether to include or exclude ARP Act child care stabilization funds. Federal Pandemic Unemployment Compensation, which provides an additional $300 per week to individuals who are collecting regular state or Federal UC, through weeks of unemployment ending on or before March 14, 2021. For example, providing gift cards to child care providers may be allowable if the cards relate to an integral part of the child care program. It would be OCCs expectation that Lead Agencies would employ this flexibility only on a temporary basis for the period of the public health emergency related to COVID-19. Using Indiana's federal COVID-19 relief funding, the Office of Early Childhood and Out-of-School Learning (OECOSL) launched the Build, Learn, Grow Stabilization grant program to provide critical funding to early childhood and school-age providers, support their program's operating expenses and help them rebuild their programs for the future. Care provided in emergency situations should be of the highest quality that is reasonably practicable given the particular circumstances. However, there may be some situations where child care stabilization funding should not be reported as income by a family child care provider (e.g., if the funding were used to cover rent, and if that did not affect a recipients net income). The definition of what counts as income for WIC is determined at the federal level, and payments from child care stabilization funding would generally count as income. In order to be a qualified child care provider and eligible to receive a subgrant, a child care provider must either be open to provide child care services or temporarily closed due to public health, financial hardship, or other reasons relating to the COVID-19 public health emergency at the time of application. As such, states and territories cannot use CARES Act or CRRSA Act funds for construction or major renovation. Q: If I pay myself, how much will I owe in taxes? 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. Ive created an instructional video that answers these questions and many more. State tax rules apply. Applications need only request the minimum information necessary to make the subgrants and meet the federal reporting requirements. 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. CCDF funds allocated in FY2018 were available for obligation in FY2018 or FY2019. Lead Agencies have the option to waive the income eligibility requirements for children who receive or need to receive protective services, if determined to be necessary, on a case-by-case basis. Effective August 2022, all CCSG Monthly Reporting of expenditures will be based on the seven categories listed below: Please review the CCSG Reporting Guide for more details. Section 103(d) of the American Taxpayer Relief Act amended the relevant statutory provision, 26 U.S.C. The CCDF final rule at 45 CFR 98.16(aa) requires the Statewide Disaster Plan (or Disaster Plan for a tribes service area) to incorporate guidelines for continuation of child care subsidies and child care services, which may include the provision of emergency and temporary child care services during a disaster, and temporary operating standards for child care after a disaster. Q: If I pay my assistant with the grant, do I still have to pay taxes on it? Can a sole proprietor of an FCC use the grant funds to pay expenses that are associated with the program but are also inclusive of normal household bills? You can deduct the amount you pay your assistant. OCFS is prioritizing workforce support for child care staff by requiring that at least 75% or the Child Care Stabilization Grant 2.0 for Workforce Supports be spent on workforce support expenses. However, when families resume work, it would not be considered an increase to subsequently raise the co-payment to the original amount, provided it does not exceed the amount established at the previous eligibility determination/re-determination. Here is a link to the US Department of Labors webpage on UC benefits related to the COVID-19 outbreakVisit disclaimer page. 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. The definition of what counts as income for federal housing assistance is defined by section 3 of the U.S. Housing Act of 1937 and HUDs implementing regulation at 24 CFR 5.609. The CARES Act and the CRRSA Act do not address use of funds for construction or renovation; accordingly, regular CCDF/CCDBG rules apply. Contributions to an IRA will not reduce your Social Security/Medicare taxes. The goal of the child care stabilization grants is to provide financial relief to child care providers to help defray unexpected business costs associated with the pandemic, and to help stabilize their operations so that they may continue to provide care. Do programs need to spend all the grant funding each month? Income is a wholly different financial test from the assets test one could have very little income, but significant assets, and vice versa. Tribal lead agencies should describe how the child care sector will be maintained while using the ARP Act stabilization funds for construction or major renovation. The CARES Act and the CRRSA Act do not address the minimum 12-month eligibility period for essential workers; accordingly, regular CCDF/CCDBG rules apply. Review the Instructions and Terms & Conditions prior to applying for each funding opportunity. Grant reporting will be completed in the Professional Development (PD) Registry. This builds on critical down payments on relief . Lead agencies may determine the process they use to award the subgrants and are not required to use their agencies official subgrant process. In order to be a qualified child care provider and eligible to receive a subgrant, a child care provider must either be open to provide child care services or temporarily closed due to public health, financial hardship, or other reasons relating to the COVID-19 public health emergency at the time of application. Each state has its own guidelinescheck your local government website to confirm: Who is eligible and how to apply for the grant. A: Each state has its own rules about this. However, OCC reminds Lead Agencies that a waiver for extraordinary circumstances is only necessary if the change would not comply with federal CCDF requirements; otherwise, changes can be made through Option 1: amending requirements, through Plan amendments if necessary. Deck from the C3 training sessions be available a: each state has its own guidelinescheck your government. Professional Development ( PD ) Registry regulated child care stabilization grant taxable registered in the allowable expenditure.. 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