Child Care Subsidy Grant Program
What is the Child Care Subsidy Grant Program?
Pepperdine understands that one of the most difficult work/life issues for employees with children is the high cost of child care. The University created this Child Care Subsidy Grant Program to assist University faculty and staff in meeting the cost of child care.
Program grants are awarded based upon an annual application process and are funded by the University through its existing Dependent Care Spending Account on a pre-tax basis. The Program provides a grant of up to $5,000 a year to qualified employees with dependent children ages twelve and under. Program claims will be administered under the same rules and regulations governing Pepperdine's Flexible Spending Account (FSA). Grants are awarded annually each Fall. Employees hired after the annual application period has closed may apply for funding the following year.
Who is eligible?
There are two eligibility steps that are used to determine eligibility for a grant.
1) Employee Eligibility
- You are a full-time, benefits-eligible faculty or staff member, AND
- Your spouse or domestic partner works at least 30 hours per week or is a full-time student, OR
- You are single or divorced and have child(ren), age(s) twelve and under, whom you have custody and list as your legal dependent(s) on your tax return.
2) Child Eligibility
- Your child is twelve years or younger as of December 31st, 2021,
- Your child is or will be born on or before December 31st, 2020, AND
- Your child qualifies as a 'dependent child' on your Federal tax return, you have custody of your child, and you are considered the legal guardian.
If I qualify for a grant, how do I use the grant?
- Enroll in the Dependent Care pre-tax Flexible Spending Account for the following calendar year.
- Once enrolled, submit receipts from the eligible child care provider. Eligible child care expenses will be reimbursed in accordance with terms of the Account up to the grant amount for that grant year.
- Use it or lose it. Any unused balance in the Account at the close of the plan year will be forfeited and will return to the University. The Program grant is not transferable or portable.
- Once enrolled, the grant is credited to the Account on a per-pay-period pro-rata basis throughout the plan year (e.g. if an applicant is awarded a $2,400 grant, then $200 per pay period will be deposited into the Account for an exempt employee, or approximately $100 per pay period for a non-exempt employee).
How much can I expect to receive from a grant?
The amount of each individual Program grant is determined by several criteria including, but is not limited to:
- The applicant's household income,
- The number and age(s) of the applicant's child(ren), and
- The total number of applications and the total funds available each year.
The Internal Revenue Service (IRS) allows a maximum of $5,000 per year per household to be reimbursed through the Account. However, based on the applicant pool, the $5,000 maximum may not be granted to every qualified applicant. The grant amounts will vary year to year based on Program funding and the number of qualified applicants and eligible children.
*NOTE: IRS allows a $5,000 annual maximum, which can be applied to child care expenses whether the funds come from a Program grant, the employee's own pre-tax contribution to their account, or a combination of both. For example, if a Program amount of $2,500 is awarded, an employee may choose to contribute an additional $2,500 from his/her own wages into the account for a total of $5,000.
Possible Tax Implications
You should consult your tax professional before accepting a grant award. If you are awarded a Childcare Subsidy Grant, there may be tax implications if:
- You are married but file taxes separately.
- You have custody of your child(ren), but your ex-spouse claims them on his/her taxes [or you alternate claiming the child(ren) on your taxes.
- Your spouse has no earned income for the tax year, even if looking for work and receiving unemployment compensation.
- You do not use the entire grant award for child care expenses.
How do I apply for a Child Care Subsidy Grant?
If you wish to be considered for a Child Care Subsidy Grant you will need to complete the 2021 application form. Applications must be received by October 1, 2020.
How will I be notified?
Grant notification will be e-mailed to your campus email address prior to Open Enrollment starting November 2, 2020. If you receive a grant, you must enroll in the Dependent Care Flexible Spending during the FSA Open Enrollment period.