2020 Tax Returns: Tax Tips for Registered Family Child Care
Don’t Let Tax Time Get You Down! We have resources to help!
- Recorded Webinar with Q&A. 2020 Tax Returns: Tips for Family Child Care Home Providers (Handling Grants, COVID business expenses, & More!), January 2021
- Slide Presentation from the 2020 Tax Return Recorded Webinar
Additional Resources You Can Use!
These one pagers are easy-to-understand explanations of IRS forms and business calculations to save you money!
- Understanding the Time-Space Percentage Used to Claim Business Expenses on Your Tax Forms (A one page explainer, English and Spanish)
- IRS Form 8829: Understanding Expense Deductions for the Business Use of Your Home (A one page explainer, English and Spanish)
- IRS Schedule C: Understanding Business Deductions Using Schedule C for Sole Proprietors (Profit or Loss Business IRS form, a one page explainer, English and Spanish)
- Recorded Webinar with Q&A. The Tax Consequences of Coping with COVID-19: Tax Tips for Family Child Care Home Providers (Deductible expenses, calculating the time-space percentage, understanding SBA programs, deciding when to claim Social Security, and more!), February 17, 2021
- Slide Presentation from the Tax Consequences February 17, 2021 Recorded Webinar.
Other Resources from Tom Copeland
- Tom Copeland’s web site
- 2020 Tax Changes Affecting Family Child Care Providers (February 17, 2021)
- What Are the Tax Consequences of a State Grant? (February 8, 2021)
- How to Find, Choose and Work with a Tax Professional (January 16, 2021)
- How to Fill Out the PPP First Draw Application Form (January 18, 2021)
- How to Fill Out the PPP Second Draw Application Form (January 21, 2021)
Links to Internal Revenue Service Forms & Material
- IRS Form Schedule C – Profit or Loss from Business (Sole Proprietorship)
- IRS Video – Schedule C: Who need to file this form and how to do it
- IRS Publication, Schedule C Instructions & Additional Information
- IRS Form 8829 – Expenses for Business Use of Your Home
- IRS Publication, Form 8829 Instructions & Additional Information
- All IRS Forms and Publications
- How to Apply for the Economic Injury Disaster Loan (EIDL) Program (February 4, 2021)
- Apply Now to Get New Money from the Paycheck Protection Program (PPP)!
- Top Three Record Keeping Tips for 2021
- How the New Tax Law Affects Family Child Care Providers
- 2021 Standard Mileage Rate Announced
- The Truth About Parent Receipts
- How Can Sponsors and Providers Rebuild in the Midst of a Pandemic (Child and Adult Care Food Program, CACFP)
U.S. Small Business Administration (SBA) Business Relief Options for Family Child Care Homes
In response to the COVID-19 public health pandemic, Congress passed several bills in 2020 to provide business relief, particularly for small business owners such as family child care providers. One program that is available for FCC providers is the Paycheck Protection Program (referred to as the PPP). This is a “forgivable loan” – in other words, a grant – if the use of the loan complies with eligible spending for the money.
In general, this means at least 60% of the funds are used for payroll related costs and 40% for fixed costs such as mortgage interest, rent, utilities, software used for your business (e.g., for record-keeping or supporting other business operations), perishable goods (such as food costs), expenses for PPE, cleaning supplies, and other expenses related to social distancing and public health requirements related to COVID. FCC providers do not need to have employees to receive a PPP loan! As a sole proprietor, you are considered an “employee” for the purposes of PPP!
In December, Congress passed legislation that separated the PPP program into two programs.
- First Draw PPP forgivable loans are for businesses that did not receive a PPP forgivable loan in 2020.
- Second Draw PPP forgivable loans are for businesses that did receive a PPP forgivable loan in 2020, but still have additional need for financial support. The Second Draw PPP loans are restricted to businesses with 300 or fewer employees and must be able to show at least a 25% reduction in revenue between comparable quarters in 2019 and 2020.
Below are resources to learn more about First and Second PPP forgivable loans.
Recorded Webinar. How Family Child Care Providers Can Take Advantage of the New SBA Loan and Grant Programs (by Tom Copeland, January 23, 2021. This is a 90 minute webinar.)
Links to SBA PPP resources:
- SBA Business Relief Options (all)
- First Draw PPP Loan Information (You can apply for a First Draw PPP Loan through May 31, 2021)
- Find SBA approved PPP lenders in your state or community (banks, credit unions, etc.)
- How to Calculate Maximum Loan Amounts for First Draw PPP Loans and What Documentation to Provide – By Business Type (Tom Copeland also demonstrates this calculation in his January 23, 2021 webinar!)
- Second Draw PPP Loan Information for businesses that previously received a First Draw PPP Loan, have no more than 300 employees, and can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. You can apply for a Second Draw PPP Loan through May 31.
- Find SBA approved PPP lenders in your state or community (banks, credit unions, etc.)
- How to Calculate Maximum Loan Amounts for Second Draw PPP Loans and What Documentation to Provide – By Business Type (Tom Copeland also demonstrates this calculation in his January 23, 2021 webinar!)
COVID-19 Economic Injury Disaster Loans. The U.S. Small Business Administration offers low interest loans to small businesses, including family child care providers. Unlike the PPP program, the Economic Injury Disaster Loans (referred to as EIDL) are not forgivable. The interest rate for family child care homes is 3.7%. Payments are deferred for one year (although interest accrues). The loan is for 30 years, but can be paid back sooner if the borrower chooses to do so.
Targeted EIDL Advance funds of up to $10,000 (which are grants, not loans) will be available to applicants located in low-income communities who previously received an EIDL Advance for less than $10,000, or those who applied but received no funds due to lack of available program funding. Applicants may qualify if they:
- Are located in a low-income community. The definition of a “low-income community” is defined here.
- Have more than a 30% reduction in revenue during an 8-week period beginning on March 2, 2020, or later. Providers will be asked to provide gross monthly revenue (all forms of combined monthly earnings received) to confirm the 30% reduction.
Applicants do not need to take any action at this time. The SBA will reach out to those who qualify.
U.S. Internal Revenue Service (IRS) Business Relief Options for Family Child Care Homes
Employee Retention Tax Credit. For family child care providers that have an employee, you may also qualify for an employee retention tax credit. Read this one pager on the Employee Retention Tax Credit and talk to your tax preparer to see if you can claim this tax credit.
- New Jersey Economic Development Authority Home Page (the resources below can all be found on the NJ EDA website! Check it out!)
- Business.NJ.Gov, New Jersey COVID-19 Business Information (COVID rules & guidance plus grants & loans)
- What county and local government financial assistance programs are available for my business?
- Where can I find more information about the NJ Small and Micro Business PPE Access Program?
Tools You Can Use to Support
Have your heard about our online family child care toolkit? Learning resources, business templates, discounts on frequently purchased products and more!
- Recorded Webinar. Overview of the Online Family Child Care Toolkit (January 23, 2021)
- Slides (Introduction to the webinar)
For more information contact:
Contacta con nosotras en español:
- Tom Copeland blog and 13-minute video to help FCC providers apply for the PPP program under the new more generous rules recently announced by the SBA (March 4, 2021)
- SBAPaycheck Protection Program (PPP) Extended (One Pager, Committee for Economic Development, March 2021)
- Unemployment Compensation Update (One Pager, Committee for Economic Development, March 2021)
- SBA First Draw PPP Forgivable Loan Overview (U.S. Small Business Administration, January 2021)
- SBA Second Draw PPP Forgivable Loan Overview (U.S. Small Business Administration, January 2021)
- SBA EIDL Loan Overview (U.S. Small Business Administration, January 2021)
- SBA Targeted EIDL Advance Overview (U.S. Small Business Administration, January 2021)
- IRS Employee Retention Tax Credit Overview (Child Care Aware of New Jersey, March 2021)
- FAQs from Tom Copeland’s web site related to SBA relief (e.g., First and Second Draw PPP loans for family child care providers)
Professionalize Your Family Child Care Home
- Recorded Webinar with Q&A. How to Effectively Use Contracts & Policies for Family Child Care Homes in the Age of COVID-19 by Tom Copeland, February 22, 2021
- Slide Presentation from the February 22, 2021 Recorded Webinar
Money Management & Retirement Planning
- Recorded Webinar with Q&A. Money Management and Retirement Planning by Tom Copeland, March 1, 2021
- Slide Presentation from the March 1, 2021 Recorded Webinar
- Individual Retirement Account (IRA) Comparison Matrix (One page explainer, March 2, 2021)