On March 11, 2021, the United States Congress passed and President Joe Biden signed into law the American Rescue Plan Act of 2021. This $1.9 trillion economic stimulus bill is intended to assist in the recovery of the United States from the disastrous financial and health effects of the COVID-19 pandemic.
With this there is funding and relief available to all Americans, but how does it apply specifically to childcare providers and families with children under 5 years old?
For Childcare Providers
Help is on the way to help small businesses recover. For childcare providers, there is $15 billion available in the form of an Emergency Injury Disaster Loan. These loans are designed to assist severely affected small businesses recover from the COVID-19 pandemic, and are specifically aimed at businesses that employ less than 10 people. Please visit the Small Business Association for more details about the Emergency Injury Loan.
There has been an additional $7 billion made available through the Paycheck Protection Program. With that also comes a change in the eligibility criteria that will now include non-profit organizations that were previously excluded from the program. For more information or to discover if your or your program is eligible, please learn more about the Paycheck Protection Program here.
If you are an employer who offers paid sick leave and family benefits, you may be eligible for an additional tax credit from April 1, 2021, through to September 30, 2021. Employers participating in the Families First Coronavirus Response Act may receive other tax credits when in addition to the permitted FFCRA emergency sick leave criteria, wages are paid to employees that are awaiting the results of a COVID test. This extends to any employee that has been exposed to COVID-19, and any issues that may arise from immunizations related to COVID. Emergency paid family leave would be granted when an employee cannot work as a result of having to care for a child whose school has been closed due to the pandemic. More information about Families First Coronavirus Response Act can be found here.
As an employer, some childcare operators may feel the sting of extended employment insurance benefits as this may impact their ability to gain or retain regular or casual staff. Employment benefits are currently paid weekly and have been extended beyond March 31, 2021.
$40 billion dollars in childcare grants have been announced through the Child Care and Development Block Grant Program. The Child Care and Development Block Grant (CCDBG) Act allows for federal funding for childcare subsidy for families with low-income. Part of the CCDBG’s mandate is to provide funds to help childcare operators improve the overall quality of their care programs. To get more information on Child Care and Development Block Grants, click here.
The American Rescue Plan bill also sets aside an additional $1 billion to support the Head Start program. Head Start provides education, health and nutrition services to low-income children and families and provides a connection and a network for vulnerable children and families. For more information about Head Start, click here.
In addition to $1,400.00 per individual, the American Rescue Plan offers some tax breaks to families with young children. The new bill expands on the existing child tax credit for this year only. In 2021, some families will be permitted to offset up to $3,000 per child up to the age of 17. This extends to include up to $3,600 for each child under the age of 6 years old. The amount of the benefit will be based on annual income and will be calculated at a lower rate for single parent filers that earn more than $75,000 per year, or for married couples that make more than $150,000 in a year. This credit is now also fully refundable.
The stimulus package also works hand in hand with the child and dependent care credit by making this credit also fully refundable. It also increases the benefit up to $4,000 for a single person and up to $8,000 for a married couple. The value of this credit will now be determined by looking at 50% of the total of any eligible expenses. The income limit for receiving this credit has also been increased up to $125,000 for households. Please note, this change is for 2021 only.
The full American Rescue Plan Bill can be viewed here.
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