Family Child Care Home Provider Business Support

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

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

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.

You may also be interested in:

Tom Copeland's slides from the family child care home webinar on January 23, 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)

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, 2021.
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 or you can use the SBA mapping tool to check to see if your zip code is located in a low income community.
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 web site! 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?

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)
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)

Tools You Can Use to Support

Your Registered Family Child Care Home!

Have your heard about our online family child care toolkit? Learning resources, business templates, discounts on frequently purchased products and more!