Child Care Aware of Virginia
Family Child Care Home Business Support
2020 Tax Returns: Tax Tips for Family Child Care Home Providers
Don't Let Tax Time Get You Down! We have resources to help!
Links to Internal Revenue Service Forms & Material
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)
Other Resources from Tom Copeland
Have your heard about our online family child care toolkit? Learning resources, business templates, discounts on frequently purchased products and more!
- The Virginia Shared Services Network is a platform of resources, which includes an online family child care toolkit.
- Slides (Screenshot overview of the online FCC toolkit in English and Spanish)
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:
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
Virginia COVID-19 Child Care Information
Let the IRS help you determine if your business is likely to qualify for one or more of the tax relief options currently available.
Some allow for an immediate dollar-for-dollar tax offset against payroll taxes to help pay for employee sick leave and some are designed to help keep employees on your payroll (such as the Employee Retention Tax Credit).
- Family child care providers can get a tax credit against self-employment taxes for purposes of qualifying for paid leave. Read more here in the IRS FAQs. Self-employed individuals (such as family child care home providers) file for the paid sick and family leave credit using IRS form 7202.
- Family child care providers cannot utilize the employee retention tax credit unless they have employees.
All you need to do is answer a few questions. It should take less than 5 minutes.
Access the IRS COVID-19 Business Tax Relief Tool Now!
IRS COVID-19 Business Tax Relief Tool
Ask your tax preparer if these credits are right for your business!
Tools You Can Use to Support
Your Family Child Care Home!
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.