2024 Child Care Subsidy Grant Program Guidelines

Overview

The Child Care Subsidy Grant program (CCSG) provides a grant of up to $10,000 a year to qualified employees with children under 13 years of age. The purpose of the grant is to assist Stanford faculty and staff in meeting the cost of child care. The WorkLife Office determines eligibility for a child care grant based on the application intended specifically for this program.

There are two application periods for 2023. The 12-month grant is awarded through Stanford’s Dependent Day Care Flexible Spending Account (DDCFSA) plan and is tax-free. Fidelity administers child care claim reimbursements based on the rules and regulations governing Stanford’s Dependent Day Care Flexible Spending Account plan. The 12-month grant includes an optional taxable award component. The optional 12-month taxable award is administered in two payments -- in April and July of the award year.

The taxable 6-month mid-year grant is prorated and administered as a one-time payment in July.

Application periods

Each application period has specific eligibility requirements. Employees may apply only in the period that you meet the eligibility criteria. All grants are made on an annual basis. Employees must reapply for each year they wish to receive a grant. The application periods for the CCSG are as follows:

* The 6-month grant is pro-rated to 50% of the full year award.

How it works

Applications are reviewed for eligibility compliance and then considered on the basis of need as defined by an applicant’s household federal taxable gross earnings, the age(s) of the child/children in the family, and if an exceptional child care expense is claimed. Each applicant must apply for a CCSG for every year they wish to receive a Stanford subsidy for their eligible child care costs.

12-Month Tax-free Grant Awards

Your CCSG award will automatically be accepted in My Benefits and applied to your Dependent Day Care Flexible Spending Account (DDCFSA). If you are on leave during Open Enrollment, your grant will be automatically accepted upon your return.
Once enrolled, the grant is credited to the recipient’s DDCFSA for the following calendar year on a pay-per-period basis (24 total). Eligible childcare expenses would be reimbursed in accordance with the terms of the DDCFSA up to the grant amount for that year.

Employees who qualify for a CCSG are responsible for understanding and complying with the rules and regulations governing Stanford’s DDCFSA plan. The federal tax law has strict rules about the use of these accounts. These rules must be followed without exception.

Please review the detailed information regarding the DDCFSA on the Benefits website to understand:

• What constitutes eligible childcare expenses 
• How to submit reimbursement claims or pay via FSA debit card
• What happens to unclaimed DDCFSA reimbursements

When a recipient accepts a tax-free grant and is enrolled in the DDCFSA, your total grant amount is divided by 24 and credited to his or her DDCFSA on a per-pay-period basis throughout the plan year. Once the money is credited in a given period, the recipient may request reimbursement for eligible child care expenses for children under 13 years of age. Expenses must be incurred during the calendar year following the grant application period.

$5,000 annual limit

Due to the strict IRS rules that apply to the DDCFSA and the tax-free nature of this program, tax-free grant amounts cannot exceed $5,000 per year, per family. In addition to that policy, the combination of tax-free grant funds and any funds you contribute to your DDCFSA cannot exceed $5,000. For example, if an applicant qualifies for a grant of $2,000, he or she may choose to contribute $3,000 from wages earned to his or her DDCFSA for a total of $5,000. (If you accept the optional taxable grant, that is not part of the IRS limit because you pay taxes on the amount. Read more below in the 12-Month Taxable Grants section.) The annual contributions an employee would like to make toward their DDCFSA must be indicated during Open Enrollment. If an applicant receives a $5,000 tax-free grant, you cannot contribute any additional funds to a DDCFSA, whether through Stanford or their spouse’s employer. 

Tax guidance

The household and dependent care credit is an allowance for a percentage of your annual eligible daycare expenses to be used as a credit against your federal income tax liability under the Code. To learn more about the household and dependent care credit refer to IRS Publication 503.Grant recipients are responsible for understanding and complying with the IRS guidelines that govern Stanford’s Dependent Day Care Flexible Spending Account plan.

To qualify for tax-free treatment of your CCSG award, you must supply the taxpayer identification number for each dependent care provider to the IRS with your annual tax return by completing IRS Form 2441. There may be other 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 are in the process of getting divorced or are legally separated.

Consult your tax professional or IRS Publication 503 for further guidance before accepting your reward. IRS Publication 503 and IRS Form 2441 and instructions can be downloaded from https://www.irs.gov/

12-Month Taxable Grant Awards

The full-year taxable grants are administered in two payments, once in April 2023 and once in July 2023. It can be used for any child care related needs that occur from April –December 2023. All applicable taxes will be withheld and final payment will be distributed to the recipient in the same manner as their standard pay statements.

6-Month Taxable Grant Awards

For 6-month taxable grants, the grant is pro-rated to 50% of the full year tax-free award, and is administered in one payment in July. All applicable taxes will be withheld and final payment will be distributed to the recipient in the same manner as their standard pay statements.

Eligibility

The WorkLife Office determines eligibility for these grants based on the following information -

1. The faculty or staff member must

a. work for Stanford University in a benefits-eligible role at least 50% FTE or more,

b. have an appointment schedule to last six months or longer (four months for bargaining unit employees),

c. be single, married, in registered domestic partnership, or share a household with the parent of the child(ren) who is

a. employed at least 50% time, or b. a full-time student, or c. disabled, as defined by the IRS

ii. Those who share a household with the other parent of his or her child(ren), the partner or spouse is considered the co-applicant and will need to provide his or her financial documents in order to be considered for a grant. If both parents are employed at Stanford and reside in the same household, only one parent is eligible to apply for the award. The other parent will automatically be designated as the co-applicant.

iii. An applicant's spouse or partner must meet one of the requirements listed in this section in order to be considered for a grant. If he or she is able to work and is unemployed during a given application period, the family may apply in a future application period when the spouse or partner’s employment status has changed. (There are two application periods per calendar year.)

d. have household federal taxable gross earnings of $216,000 or less than, as determined by Stanford

i. The child/children must

1. be under 13 years old when care is provided

2. be listed as the applicant’s dependent(s) on his or her tax returns (this includes foster children, legally adopted children, stepchildren and any other children for whom you are the legal guardian ( except for siblings of the employee), or

3. “qualified persons” per your role as the Custodial Parent*

*A Custodial Parent can provide a copy of Form 2441 that was filed with the previous year’s Federal tax returns. Per the IRS definition, the Custodial Parent is the parent with whom the child lived for the greater number of nights. If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income.

2. Benefit Calculation: The WorkLife Office must review the following forms in order to calculate the household’s federal taxable gross earnings

1. A signed copy of the applicant’s previous year’s federal tax return Form 1040 or 1040 SR , and, if applicable, a copy of the applicant’s Schedule C

2. For Custodial Parents, a copy of the applicant’s previous year’s federal tax Form 2441

3. One recent pay statement

4. For a spouse or partner (other parent who lives in the household) who file separately, a signed copy of his or her previous federal tax return Form 1040 or 1040 SR

5. One recent pay statement, and/or tax form Schedule C, for the spouse or partner

Financial need

To be considered for a Child Care Subsidy Grant, each applicant must demonstrate “financial need.” The program determines financial need based on an applicant’s household federal taxable gross earnings. Those with lower earnings are deemed to have a greater need. The following factors are taken into consideration:

• The current wages of the applicant and, if present, the partner in the household. Each wage-earner in the home will provide a pay statement showing each individual’s earnings and pre-tax deductions reported during each pay period. The former is reduced by the latter and then multiplied by the number of pay periods in the year. This is done to capture all salary-based income. For applicants who earn additional income or for partners who are self-employed, the earnings reported on IRS Form Schedule C for either or both parties is then added to the total earnings calculation. When applying for a CCSG, an applicant must submit a copy of his or her most recent pay statement, one most recent pay statement for his or her partner and filed IRS Schedule Cs submitted to the IRS.

The federal taxable gross earnings of the applicant’s household. Federal taxable gross earnings are calculated by adding both the salary and non-salary earnings for the applicant’s household. Specifically, one most recent pay statement for the applicant and his or her partner (salary portion) and the earnings reported on IRS Form Schedule C IRS Form 1040 for the tax year immediately prior to the application year for both individuals (non-salary portion). If an applicant files his or her tax returns separately from a spouse, registered domestic partner, or partner (the other parent who lives in the household), the applicant will need to submit copies of all relevant tax returns for both parties in order for the household’s federal taxable gross earnings to be calculated.

Annual grant amounts

The chart below shows the grant totals for the year beginning January 1, 2023. Child Care Subsidy Grants are based on an applicant’s household federal taxable gross earnings and the number of children in the home under 13 years of age. Children must be born on or after January 1, 2011, to be considered for a grant.

The maximum total annual grant amount cannot exceed the application period limit, regardless of sibling award or exceptional child care expenses.

Additional Taxable Grant for Exceptional Child Care Expenses

We recognize there may be some situations within a regular caregiving context, either in a care facility/school or within the home, that extends the financial burden of normal child care. 

You may be eligible to receive an additional taxable grant of $1,000 to meet these exceptional child care expenses for tax dependents under 13 years of age. 

To apply for this additional taxable grant during the CCSG application period, please be prepared to include a description of the exceptional child care expense and upload proof of the additional expense (such as contracts or paid invoices). 

Please note the distinction between exceptional child care expenses and medical needs, such as speech therapy and occupational therapy. Stanford offers two types of accounts that let you set aside money for health care expenses, including for dependents, before taxes are calculated on your salary: 

• With a health savings account (HSA), there is a limit to what you can contribute in a year, but not how much you can save over a lifetime; unused dollars will carry over every year but requires you to be enrolled in a high deductible health plan.
• With a health care flexible spending account (FSA), there is a limit to what you can contribute in a year and it is designed to be spent within the year, allowing a small amount to carry over. But it is compatible with all health plans.

Please review this webpage to see what qualified medical expenses are covered under these accounts.

Examples of eligible exceptional child care expenses can include, but are not limited to: 

• Child care tuition and fees for providers that specialize in additional support for children with disabilities

• Child care, or caregiver related training not reimbursed by any other agency 

• Care expenses for the wellness of the child including support with feeding, transferring/repositioning, dressing, personal hygiene, and toileting

Situations not considered an exceptional child care expense include, but are not limited to: 

• Multiple births 
• Paying above average child care rates, or
• High monthly non-childcare expenses

The WorkLife Office will evaluate requests for exceptional care needs to determine if an additional $1,000 in taxable grant funds may be awarded. Please note that no more than $1,000 will be awarded per household, no matter how many individual needs are documented. Further, the maximum total annual grant amount cannot exceed the application period limit, regardless of exceptional child care expenses. Applicants will receive notification if this award is granted.

Application process

• The application (with instructions) is available on the website.
• Determine the Application Period for which you are eligible to apply (see “Application Periods”)
• You must apply annually. Grants are not automatically renewed.

Grant qualification is contingent upon eligibility review and approval of your application. Completed applications and supporting documentation must be submitted by the period deadline listed.

Individuals dealing with accessibility issues can contact the WorkLife for further instruction and assistance.

Confidentiality

All applications and documents submitted to qualify for a Child Care Subsidy Grant shall be treated as a confidential personnel file maintained by the WorkLife Office or its authorized agent.

Grant approval notification

Each applicant will receive an email notification confirming the WorkLife Office has received his or her application.

Once all applications have been reviewed for the Application Period they have been submitted, each applicant will receive final grant notification via e-mail.

Obligations for the grant recipient

Each CCSG recipient has the following obligations:

• Be completely truthful on the application for a grant. Misleading Stanford on a Child Care Subsidy Grant application could result in adverse consequences including revoking a grant, being required to repay the university amounts received pursuant to the grant, and being barred from seeking future Child Care Subsidy Grant, or even termination.

• Accepting a Full Year (12-Month, Tax-Free) Grant: Each recipient must understand and abide by all rules and regulations that govern Stanford’s Dependent Day Care Flexible Spending Account (DDCFSA).

Program Administration

The WorkLife Office at Stanford University determines the Child Care Subsidy Grant eligibility.

WorkLife – CCSG Applications

University Human Resources

Stanford University

505 Broadway, 5th Floor, Mail Code 8802

Redwood City, CA 94063C

Phone: 650-723-2660

Fidelity administers Dependent Day Care Flexible Spending Account claim payments. Please visit the Fidelity website for more information.

Grant amendments

If an applicant meets the eligibility criteria for the 12-month award and expects to add a newly eligible child to their family in another Application Period, the applicant should apply for the full-year award and then apply for an amended grant during the mid-year application period.

For example, if an applicant added a newly eligible child during the mid-year application period after being awarded a grant during the 12-month application cycle of the same grant year, they may be eligible for an additional amount by applying for an amendment to the original grant during the Mid-Year application. The funds provided by the 12-month award will be through Stanford’s DDCFSA, tax-free. The Mid-Year amended grant award will be paid as a one-time payment, prorated, with taxes withheld.

Example 1: A new employee, hired on August 1, has a 3-year-old. They applied for the 12-month grant and were awarded $2,000, which will fund the DDCFSA starting January 1 of the following year. A second child arrives in March, and the recipient applies for a Mid-Year amended grant in May. In July, they receive a check for $500, from which taxes are withheld, for the second child. Funding continues to the DDCFSA for the whole calendar year for the 3-year-old, subject to other program rules.

Example 2: A continuing employee with a 6-year-old applies for a 12-month CCSG Grant and receives a grant for $1,000. The grant recipient adopts an infant in April and applies for a Mid-Year amendment in May. In July, they receive a prorated and taxable payment—the amount for which is based on the applicant’s household federal taxable gross earnings for the infant. The funding to their DDCFSA will continue for the 6-year-old for the duration of the calendar, subject to other program rules.

If the applicant already has a grant for two or more children and a newborn (third child) joins the family, they will be ineligible for additional grant funds.

How to apply for a grant amendment

If a grant recipient would like to apply for an amended grant due to the addition of an eligible child to his or her family, the following must be provided:

1. A new, completed amendment application 
2. Proof of new dependent’s status (e.g. copies of birth certificate, certificate of live birth, adoption certificate, or custodial award documents
3. If the applicant or spouse/partner has changed jobs since the original application was submitted, tax and wage information is required to address this change.

How to obtain grant funds - 12-Month application period

Step 1: Automatic enrollment in a Dependent Day Care Flexible Spending Account

• During Open Enrollment, each award recipient will automatically be enrolled in a DDCFSA.

If an applicant fails to abide by the plan’s rules and regulations, they cannot take advantage of the grant, and their money will be forfeited.

Step 2: File a Claim or pay via Stanford FSA Debit Card

• Child care costs must be incurred before a claim reimbursement from the DDCFSA. The IRS considers an expense to have been “incurred” when the award recipient has both paid for and received the child care services. Only child care expenses incurred during the plan year, beginning January 1 are eligible for reimbursement from the award recipient’s DDCFSA.
• Only child care expenses documented with the taxpayer identification number or social security number for the child care provider, as required by the Internal Revenue Code, can be reimbursed. No reimbursements will be made for care provided pursuant to informal or “under the table” arrangements.
• Fidelity administers Dependent Day Care Flexible Spending Account claim payments. Please visit the Fidelity website for more information.

Step 3: Receive reimbursement

• The annual grant amount will be divided into 24 payments. The award is credited to a grant recipient’s Dependent Day Care Flexible Spending Account in equal installments on a pay-per-period basis. The IRS allows for reimbursements from a DDCFSA only for expenses that are eligible, incurred, and for which there is a sufficient balance available in that DDCFSA.
• Reimbursement payments are issued based on the balance available in a DDCFSA and the dollar amount of the claims submitted against the account. If a claim request is higher than the account balance, only the balance is available to be issued.
  • Example: A CCSG award is provided to an employee for $2,000 for the year or $83.33 per pay period. On January 1, that employee pays $800 for child care for the entire month of January. On January 7, Stanford made a grant payment of $83.33 to the employee’s DDCFSA and the funds are available for reimbursement. The employee submits a child care claim with his or her receipt on January 10 for $800. The amount available for reimbursement is only $83.33. As subsequent grant payments are provided to the employee with each pay period, the remaining funds from the January child care expense will become available for reimbursement to the employee.

The "use it or lose it" rule

The IRS prohibits the carryover of unused balances from one year to the next, including employee contributions and CCSG awards. Child Care Subsidy Grants are not transferable, portable, or to be paid directly to employees in any manner other than that specified above.

How to obtain grant funds - mid year application periods

6- Month Taxable Grant

The application period takes place between May 1 – May 30 (approximately) each year. Employees may apply for a grant during this period if they meet the following requirements:

• Have a start date between September 1 and May 30, or
• Have added new, eligible dependents to their families between September 1 and May 30, or
• Did not meet eligibility during the previous application period

The Mid-Year grant is not administered through the DDCFSA due to IRS regulations. The grant is prorated for the period and will:

• Be paid in one lump sum July 22nd
• Be issued as a separate deposit or check to their checking accounts
• Have all applicable taxes withheld
• Be reflected as income on their W-2 at the end of the year

Family status changes and dependent day care flexible spending accounts

If an applicant receives a Child Care Subsidy Grant from Stanford, the employee can elect to make additional contributions from their wages on a pre-tax basis, so that in summation, the CCSG and the personal contributions will add up to the maximum annual total of up to $5,000 in his or her DDCFSA. The contribution rate cannot be changed or stopped during the plan year unless there is a qualifying family status change.

After a qualifying life event takes place, an employee will have up to 30 days to change his or her DDCFSA contribution. To learn more about the qualifying life events, please visit the Benefits website.

Please review the following guidance regarding qualifying life events that may impact a grant recipient’s ability to collect reimbursements from his or her DDCFSA. While these guidelines identify some of the most common potential changes, not all changes can be anticipated in advance. If a grant recipient experiences a change not listed in these guidelines, please notify the WorkLife Office so the effect, if any, on his or her CCSG eligibility can be determined.

Work schedule: 9-to-10 months per year (faculty)

For those faculty members who work a 9- or 10-month schedule in a given year, gaps in their pay may impact contributions to their individual DDCFSAs. To determine if CCSG contributions are continuing, faculty members should go online to check their Dependent Care FSA balances. If there is an issue, faculty members should contact the University HR Service Team. If necessary, a grant contribution may need to be recalculated to ensure the faculty member receives the full annual amount of his or her grant.

Divorce

If a grant recipient’s marriage or domestic partnership dissolves and they no longer have custody of the child(ren) for whose care the grant was made, or they are no longer responsible for child care costs for the child(ren), the grant recipient must notify the WorkLife Office so that the university can determine whether or not the individual is eligible for the original grant amount or a lesser amount.

Leave of absence (academic and non-academic staff)

If a grant recipient goes on a paid or unpaid leave of absence during the plan year, any grant payments (and the employee’s own contributions) to the DDCFSA will automatically stop during that time. IRS guidelines require that DDCFSA contributions cease while employees are on a leave of absence, even if the employee is paying for child care during that leave. Any dependent care expenses incurred during a paid or an unpaid leave are not eligible for reimbursement.

For more information about this topic, please review Flexible Spending Account FAQs Leave of Absence Policy.

If an employee returns to work prior to November 1, the grant payments will be set at a new, re-calculated rate for disbursement into their DDCFSA.

Example: An employee receives a CCSG of $2,000 effective January 1 of the plan year. The per-pay-period contribution for that grant is $83.33 for 24 periods. The leave of absence begins on April 1 and the employee returns to work on June 1 of that year, thereby missing 4 pay periods or $333.32 in CCSG funds. Upon returning, Stanford reallocates the remaining balance of the CCSG funds and the employee will begin receiving $125.00 each pay period and the total award amount of $2,000 by the end of the year.

If the grant recipient returns from leave during November, every effort will be made to reinstate both the employee’s contributions and the Child Care Subsidy Grant contributions prior to the last pay period of the calendar year (December 1 – 15) subject to administrative systems deadlines and limitations.

If the grant recipient returns from leave during December, recalculating the award will not be possible. It will be reduced to the amount that was received at the time the leave of absence began.

If the grant recipient is on leave during Open Enrollment, the grant will be automatically accepted upon their return.

Termination

CCSG payments toward an employee’s DDCFSA will cease upon termination from Stanford. In such an instance, the individual could submit a final reimbursement claim for the balance accrued through the termination date.

If the child dies

If an employee’s child is covered under the CCSG and dies, it is assumed there will no longer be any eligible claims incurred and the remainder of the grant will be forfeited. If more than one child in the employee’s family is covered under the CCSG and one of the children dies, the employee must notify the WorkLife Office so that Stanford can determine whether or not the employee remains eligible for the same grant or a reduced amount.

If the applicant dies

If a grant recipient dies, all payments towards his or her DDCFSA will cease. The surviving spouse, domestic partner, or partner can submit reimbursement claims for up to the balance remaining in the account at the time of the grant recipient’s death.

Legal and other information

Stanford University reserves the right to amend or terminate the rules, procedures, award formula and grant amounts, or any other component of the Child Care Subsidy Grant program at any time. Employees shall be notified of such changes as required by law.

The Child Care Subsidy Grant is a method for subsidizing some or all the dependent care assistance benefits provided in the Stanford University Dependent Day Care Flexible Spending Account Plan, a dependent care assistance program pursuant to section 129 of the Internal Revenue Code and a component plan of the Stanford University Flexible Benefits Program, a plan under section 125 of the Internal Revenue Code.

All rules of the Flexible Benefits Program and its component plans are incorporated herein by reference. Should any conflict arise between these guidelines and the provisions of either of the above-described plans, the Plan Administrator of the Flexible Benefits Program, or his/her authorized delegate, shall resolve such conflict, and any such decision by the Plan Administrator shall be final and binding.

No grant recipient has any vested right in any grant amount awarded or credited to their DDCFSA. All amounts credited to a DDCFSA remain the property of Stanford until a reimbursement check is issued by the Dependent Day Care Flexible Spending Account claims administrator.

No grant award in one year guarantees the recipient any right to an award during any other year.