All Rights Reserved. Child Care Stabilization Grants The American Rescue Plan Act of 2021 (ARP Act) (Pub. A: No. A: Depends on what your state says. Yes, if you are a for-profit organization this funding is taxable. In addition, many of these individuals are working extended or irregular hours, and under stressful circumstances. During the fiscal monitoring review process, will other sources of funding be reviewed outside of the C3 Child Care Stabilization Grant (such as a PPE loan)? The Office of Child Care (OCC) notes that in cases where the stabilization subgrants are being awarded to qualified child care providers through intermediaries, those intermediaries are sub-recipients administering a subaward, and, as such, would be subject to rules that apply to sub-recipients, including those related to obtainind a DUNS number or UEI. The plan includes $24 billion in child care stabilization grant funding for states, territories, and tribes to distribute within their state using the Child Care and Development Grant (CCDBG) formula. In some cases, funds used to cover operating expenses may be exempt from taxation. A: You can apply some of the grant money to cover lost revenue, but you cant deduct lost revenue as a business expense. However, families who receive TANF cash assistance may be categorically eligible for SNAP. 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. State and territory lead agencies provided information on their implementation of stabilization grant funding plans in their FY 2022-2024 Child Care and Development Fund (CCDF) Plan, Q 4.1.8e due July 1, 2021. Amend CCDF Program Requirements, through a Plan Amendment if Necessary: If the Lead Agency needs to revise some program policies, but would still be in compliance with federal requirements, they can do so without a waiver (e.g., expanding definition of protective services to accommodate impacted families; waiving copays for a portion of the caseload, etc.). These programs were extended in the CRRSA Act. 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 COVID-19. As a reminder, CRRSA Act funds may be used to waive copays for all eligible families without a CCDF waiver. A: Assuming the money you spend on items for your business are used exclusively for your business, the tax consequences are the same as paying yourself. In addition, the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Public Law 116-136) and Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act of 2021 (Public Law 116-260) provided a combined $13.5 billion in supplemental CCDF program funds to help State, Territory, and Tribal Lead Agencies address COVID-19 impacts, as well as some additional flexibilities for the use of those funds. Lead agencies must continue to meet this requirement throughout the public health emergency. The two-year grant period is scheduled to end in September 2023, meaning eligible employees may receive . The eligibility requirements defined at section 98.20(a)Visit disclaimer page of the CCDF regulations have separate financial eligibility requirements one for income and one for assets. Q: On my grant report I listed mortgage and utilities as expenses. While these funds may not be used for direct services, they can be used to cover some of the costs associated with providing and expanding direct services, such as start-up grants and administrative costs associated with using grants or contracts for direct services. 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. Generally, annual income means all amounts, monetary or not, which go to, or on behalf of the assisted family that are not specifically excluded by HUD regulations (24 CFR 5.609(a)). A: Yes. Programs that are awarded a grant will receive an IRS Tax Form 1099-NEC. This presents an administrative challenge for using grant funds, because if you dont do it correctly you may lose your funds. Lead Agencies also have flexibility in treatment of regular UC benefits. Base amount funds can be used for any approved CCDF activities and are not restricted by spending requirements. State tax rules apply. Likewise, lead agencies have the flexibility to disregard payments made to youth in, or formerly in, foster care through the Chafee Program for Successful Transition to Adulthood as income. This prohibition applies to both the set-aside and the subgrant funds. Q: If I was audited, would they just audit my grant or my entire business? Grant reporting will be completed in the Professional Development (PD) Registry. No, lead agencies should not calculate current operating expenses after deducting income, including child care subsidy payments. Attestation: You have attested, when open and providing services, to implement policies in line with guidance and orders from state and local authorities and to the greatest extent possible the U.S. Department of Health & Human Services, Administration for Native Americans (ANA), Administration on Children, Youth, and Families (ACYF), Office of Child Support Enforcement (OCSE), Office of Human Services Emergency Preparedness and Response (OHSEPR), Office of Legislative Affairs and Budget (OLAB), Office of Planning, Research & Evaluation (OPRE), Public Assistance Reporting Information System (PARIS), section 2202(d)(B)(i) and (ii) of the ARP Act, ARP Act supplemental CCDF Discretionary funds, Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, FY 2022-2024 Child Care and Development Fund (CCDF) Plan, FY 2020-2022 CCDF Plan within 60 days of the effective date of implementation, or cost of producing self-employment income (once spent, US Department of Labors webpage on UC benefits related to the COVID-19 outbreak, https://www.acf.hhs.gov/occ/policy-guidance/tribal-construction-or-major-renovation, Rent, utilities, facility maintenance or improvements, or insurance, Personal protective equipment, cleaning and sanitization, or training and professional development related to health and safety, Purchases of or updates to equipment or supplies to respond to the COVID-19 public health emergency, Goods and services necessary to maintain or resume child care services, Mental health support for children and employees, Administering child care stabilization funds, Carrying out activities to increase the supply of child care, Providing technical assistance and support for stabilization applications, Publicizing the availability of ARP Act stabilization funding, Providing technical assistance to providers receiving ARP Act stabilization funds. ATTENTION: Announcing the ARP (American Rescue Plan) Act 2021 Child Care Stabilization Payments. The Child Care Stabilization Grant is considered income and is taxable. As this requirement applies to the date of application, a school-age program that is open only 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 summer when the program reopens. 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. 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. 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. Yes, Child Care Stabilization Grant funds are considered income by the IRS. Questions are grouped in the drop-down menu below into four major categoriesARP Stabilization Grants, Supplemental Funds, Tribes, and Emergency Responseand each category has subcategories. Regarding federal tax rules, please contact your tax preparer or the Internal Revenue Service for guidance. Children do not need to be formally involved with child protective services or the child welfare system in order to be considered eligible for CCDF assistance under this category. A: No! Subgrant amounts should reflect the significant resources included in the ARP ActVisit disclaimer page and be substantial enough to stabilize struggling child care providers. Providers must report as taxable income all the money they receive from the Stabilization Grants Explore Tom Copeland's "Child Care Stabilization Grants and New Tax Changes for 2021." and The Tax Implications of the Child Care Stabilization Grants to learn more Resources from Tom Copeland's website Checks payable from the business bank account to the sole proprietor/individual, Electronic statements that document funds transferred from the business bank account to the personal bank account, Documentation evidencing expenditures made with grant funds, Responses to questions about general provider information, provider accounting systems/processes, and the internal controls in place, the amount (in dollars) of the expenditure, the category of allowable uses under which the expenditure fall, the type of supporting documentation for the expenditure. Providers receiving stabilization subgrants are not categorized as sub-recipients as defined at 45 CFR 75.2. You may view payment status by logging in. Yes. Contributions to an IRA will not reduce your Social Security/Medicare taxes. A: Yes! Providers will not be penalized for temporary closures that occur during the grant period, provided they are open and serving children for at least part of that month. Each state, territory, and tribe may further clarify eligibility requirements, but the federal eligibility parameters indicate that licensed, registered, and legally license-exempt center-based and home-based child care providers are eligible. Lead Agencies should ensure that payment practices for each type of provider reflect generally accepted payment practices in order to ensure that families have access to a range of child care options. Afterwards it costs $99.00 a year. OCC encourages tribes to coordinate with states and tribes regarding tribally affiliated children who do not live in the tribal lead agencys service area. No. The definition of what counts as income for the EITC is determined at the federal level and includes all income reported to the IRS as part of a tax filers Adjusted Gross Income (AGI). Tribal lead agencies may set-aside up to 20 percent of their ARP Act stabilization funds for administration, supply building, and technical assistance. Paying yourself involves nothing more than making a record indicating this. 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? Applications must be posted on the lead agencys child care website. After September 30, 2022, no additional CCSG awards will be made. 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. Please note that any changes to a states definition of income to take advantage of this flexibility must be reflected in a CCDF plan amendment. While tribes have some flexibility in defining "Indian child," the definition must be limited to children from federally recognized Indian tribes, consistent with the CCDBG Act's definition of Indian tribe (45 CFR 98.2Visit disclaimer page). Click Log in on the desired Program to go to that Programs EEC ARPA grants page. receipts, checks), c. Reviewing C3 training materials provided by EEC. Child Care Stabilization Grant OCCRRA is excited about the opportunity to support Ohio's Child Care Stabilization Sub-Grants. The application period ended December 14, 2022. Q Im receiving this grant quarterly through April 2023. To the extent that child care workers continue to participate in TANF, child care workers would not lose SNAP eligibility as a result of receiving child care stabilization funding. Therefore, the grants could be excluded for SNAP purposes because they may end up being excluded from income as a reimbursementVisit disclaimer page,non-recurring lump sum paymentVisit disclaimer page, or cost of producing self-employment income (once spentVisit disclaimer page). The responsibilities for document retention are the same regardless of whether you are selected for review. We remind Lead Agencies to develop emergency preparedness plans that contain 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. This blog explores the tax implications of the American Rescue Plan Act (ARPA) Child Care Stabilization Grants for Home-Based Child Care Providers. This means you will pay some additional Social Security taxes, but it also means your higher profit will potentially increase your Social Security benefits. OCC reminds tribal lead agencies that CCDF funds, including stabilization subgrants, are restricted to serving children who are under age 13, or at the tribal lead agencys option, children under age 19 and are physically or mentally incapable of caring for himself or herself, or under court supervision as defined inthe tribal CCDF Plan. Yes. Per Federal requirements outlined in The American Rescue Plan (ARP) Act of 2021 (Public Law 117-2), certify that they will meet the following requirements throughout the period of their grants: The provider will, when open and providing services, implement health and safety policies in line with guidance and orders from corresponding state, territorial, tribal, and local authorities and, to the greatest extent possible, implement policies in line with guidance from the Centers for Disease Control and Prevention (CDC). Child Care Workforce Appreciation Bonus - Now Available However, if the family is no longer eligible due to other eligibility requirements (e.g., age of child, working, or attending training/education) at redetermination, their subsidy may be terminated. Please remove any contact information or personal data from your feedback. A: You arent paying yourself for any particular hours you work. Home visiting programs typically provide services to parents and families to ensure that they have the necessary resources and skills to raise and care for their own children. Child care providers may not involuntarily furlough employees from the date of application submission through the duration of the grant. Federal law defines income for SNAP. 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. ***If you do not submit your monthly report by the deadline, you will not receive the following months grant payment*** For example: If you do not submit the August 2022 report by September 30, 2022, your October 2022 grant payment will be placed on hold and you will not receive that payment until you are compliant with reporting. Programs should spend all funding in accordance with the specific requirements of each grant program. You can deduct the amount you pay your assistant. If the program is closed during parts of the year due to schedule (e.g., operational only during the school year), they would not be eligible to apply for a subgrant during that time. The CCSG Workforce Amount began with the July 2022 grant payment for providers starting the month following application approval. Persons that require a reasonable modification based on language or disability should submit a request as early as possible to ensure the State has an opportunity to address the modification. 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. Funding for the grants comes from the American Rescue Plan Act. If necessary, you may need to include an explanation of how the items or staff time in question fall within the allowable categories. Yes, lead agencies can use funding from the administrative, supply-building, and technical assistance set-aside of up to 10 percent for states and territories and 20 percent for tribes to cover personnel costs associated with administering the stabilization funds, including term-limited staff. For all of the above answers that were No, you can still pay yourself and then use the money for these purposes. The Expenditure Tracker can be found on the EEC website under the Resources section: Commonwealth Cares for Children / Child Care Stabilization Grants | Mass.gov. Q: How do I pay myself for the hours I work in the weekends or after work hours? Under federal guidance, this clearly language clearly applies to a family child care provider, even if she has no employees. IMPORTANT: Recertifications for C3 funding between the months of July 2021 and June 2022 need to be completed no later than Monday. Lead agencies should notify a provider as soon as the decision to reverse the application is made and provide information on why it was reversed and an opportunity to appeal the decision. These are some of the many questions Ive received during my February 10th webinar How to Save Money on Your 2021 Taxes. Heres a link to the recording and power point for this webinar. 2023 BUILD Initiative. Reprograming funds for other allowable activities does not constitute a cut in funding for child care for eligible individuals and is not considered supplantation. As a result, the children of these workers are vulnerable during this time. Furthermore, for family child care providers, whether the child care stabilization funding counts as income also depends on whether it is used as income by the family child care provider who receives it. Allowable changes could include children who are Tribal members, whose membership is pending, who are eligible for membership, and/or are children/descendants of members. Who is Q: Will getting this grant put me in a higher tax bracket? In addition, expenses for this purpose are reported on the ACF-696 of ACF-696T CCDF Financial Reports under the non-direct services for systems expenditures, which are not subject to the five percent cap on administrative expenditures (45 CFR 98.54(b)(1)). Then put aside some money in a place that is low risk (bank savings account, short-term bond fund or money market account). CCDF funds allocated in FY2018 were available for obligation in FY2018 or FY2019. The closure may be a school-wide closure or for off-days of a hybrid model (e.g., a combination of in-person, virtual, and/or off days.) 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. As we all know, parents need access to safe, quality child care to get back to work. Contact your state to get the answer. Agreements with intermediaries should include requirements for intermediaries to collect and report data to lead agencies on a regular basis, as lead agencies will be expected to report on this information to OCC. 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. This enhanced FMAP rate has the effect of decreasing the amount that states will be required to spend to claim their full CCDF match allotment. These essential functions include (i) continuing payments to child care providers serving children receiving subsidies; (ii) provisions for extending eligibility re-determination for families; (iii) communication with the licensing agency to ensure that licensed programs receiving CCDF funds are safe and operational; (iv) assisting new enrollees or preparing for an influx of families who may need assistance; (v) implementation of a waiting list if the Lead Agency does not have one, as appropriate; and (vi) tracking families receiving subsidies impacted by the disaster. The lead agency may also choose to use funds provided by the CRRSAVisit disclaimer page to cover copayments for all eligible families. Tribal lead agencies that do not have a child care website must post it on a website associated with the tribe so child care providers know the application is legitimate and from a trusted source. The date of the application approval will determine the date of the first payment based on the payment schedule. Take the money! The funds are designed to stabilize the child care sector and to do so in a way that rebuilds a stronger child care system that supports the developmental and learning needs of children, meets parents' needs and supports a professional workforce that is fairly and appropriately compensated for the essential skilled work that they do. 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. Lead agencies should balance the need to collect information necessary to ensure funds are being spent correctly and not overly burdening providers. Paying a share of the ARP Act stabilization funds to another entity, including a bookkeeping firm, to apply for stabilization funding and assist with documentation as part of the grant management, is not an allowable use of the ARP Act stabilization funds. Apply for a waiver to use CCDF funds to provide direct services to families who do not meet CCDF eligibility requirements (e.g., with income above 85% of State Median Income; see note above regarding additional flexibility regarding use of the CARES Act and CRRSA Act CCDF program funds) and/or providers who do not meet CCDF health and safety requirements. The program will aim to alleviate some of the economic and operational hardships caused by the COVID-19 pandemic and response. American Rescue Plan (ARP) Stabilization Funds. These subgrants are designed to stabilize existing child care businesses, not fund the start-up or reopening of a provider not open for business. The ARP Act does not impose requirements on whether to include or exclude ARP Act child care stabilization funds. Additionally, the ARP Act gave states significant discretion in determining how the child care stabilization grants would be apportioned to child care providers, and self-employment income and exclusion determinations may vary by options selected by the state. Lead Agencies should consider whether there are other sources of fundingsuch as public education dollarsto pay for equipment being used by children and families in the home. For most Medicaid beneficiaries, the definition of what counts as income for Medicaid is determined at the federal level and includes all income reported to the IRS as part of a tax filers Adjusted Gross Income (AGI), plus some non-taxable income sources. Q: When you give a bonus to your staff, do you treat the deduction the same as payroll deductions? 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 noted in a prior FAQ, lead agencies have the flexibility to disregard Unemployment Compensation (UC) benefits or Economic Impact Payments (also called stimulus payments) under the CARESVisit disclaimer page, CRRSAVisit disclaimer page, or ARPVisit disclaimer page Acts as income. This map provides links to available child care stabilization grant applications. Lead Agencies are permitted to use funds for the establishment and maintenance of computerized child care information systems, including data systems. Lead Agencies have the flexibility to establish continued assistance periods for more than 3 months. The facility to be constructed must be used principally to provide direct child care services to children. CCDF Federal matching funds are available to states, provided that states match those funds at the Federal medical assistance rate (FMAP). Is our grant amount $15k or $24-$52k? Additional instructions for construction and major renovation procedures for Tribes can be found in the Program Instruction (CCDF-ACF-PI-2020-02) on the OCC website. Such temporary changes would not impact the amount of care the child would receive. Yes. CCDF lead agencies have the flexibility to decide whether to disregard many of the COVID-19 supplemental payments to individuals as income when determining eligibility for CCDF subsidies, unless treatment of those payments as income or not is specified in law. Examples of changes that would require a waiver include exempting providers from some or all health and safety standards, health and safety training requirements, background check components; suspending annual inspections of providers; changing income eligibility to be higher than 85% of State Median Income; or changing the subsidy eligibility period to be less than 12 months. They are: For the purposes of determining CCDF eligibility and co-payment amounts, a Lead Agency may treat the UC benefits from the CARES Act or the CRRSA Act differently from the way it treats regular UC benefits. If a program closes temporarily during the 12-month grant period (for vacation, illness/injury, or COVID-19-related issue) will the program still be eligible for the grant during that month? States and territories must use at least 90 percent of their ARP Act stabilization allocations for subgrants to qualified child care providers, and tribes must use at least 80 percent of their allocations for subgrants. 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. Because Family Child Care (FCC) providers capacity changes with enrollment, all FCC sites will be calculated using a capacity of 10 slots, regardless of the actual capacity, for the purposes of the formula. Therefore, my answers below may not be the same answers your state gives you. You will have to withhold and pay payroll taxes on these amounts. Note that child care providers that are receiving stabilization subgrants from a tribal lead agency should be serving at least one Indian child, as defined by the tribal CCDF Plan. 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