Form 1099-G Taxable Grant (box 6) Issued in my company name. Does this get entered into TurboTax Business?

[DM007]

@Sondra7After doing hours upon hours of research, I figured it out. Here’s how it’s done:

1. Using TurboTax Business edition (step-by-step), go to Federal Taxes/Income/Other Income/All other income and under “Description”, enter: California Small Business COVID-19 Relief Grant and the total amount. Doing so will increase your K1 Part III box 1 Ordinary Business Income (loss)
2. Click on “Forms” at the top right, and then on the left navigation pane, go to California S Corporation/Form 100S p1-3. Go under State Adjustment (cont.) on line 12 “Other deductions” type "CA Relief Grant" and enter the dollar amount. Doing this will reduce your Corporate CA Franchise Taxes by 1.5% to reflect the grant deduction amount.
3. Now you need to go on your personal taxes. I use TurboTax Home & Business edition and do the following: Under State Taxes, edit your CA State Returns, click continue several times until you get to a section with the heading: “Enter amounts received pursuant to the COVID-19 Relief Grant included in federal income” and enter it in the box “Small Business COVID-19 Relief Grant Included in federal income”. This will adjust form 540 8f column B (substractions) and reduce your State Taxes to reflect the grant’s deduction

I got to this site to finally figure out that adjustments due to differences between California Schedule K-1 and IRS Schedule K-1 are entered on California Schedule CA (540)

https://www.taxact.com/support/1585/2021/california-schedule-k-1-adjustments

I hope this helps you!

[Sondra7]

@DM007 Thank you so much!  This helps immensely.  You just saved me hours of researching😀.
I’m going to try this out over the weekend. 

Thanks again!

[ConsciousHumanMed]

We also received a 1099G for a COVID grant from the government in the state of California.  We have used the money as part of our operating expenses since we received it.  We included the COVID grant as "other income" under Federal taxes.  Can we itemize/categorize the operating expenditures as deductions under Federal taxes?  In that case, do we still need to include the grant money as a deduction on line 12 of California State 100S? 

Thank you so much! 

[ThomasM125]

@ConsciousHumanMed You can deduct the expenses on your federal business income schedule if they are ordinary and necessary for your business. So, you enter the grant income and related expenses on your business tax schedule, be that a schedule C for a sole proprietorship (on your personal tax return) or on form 1065 (for a partnership) or form 1120-S for an S corporation. Thus, the grant income and expenses would be reflected in your business net income, so they wouldn't be entered again elsewhere on your federal or state tax return.

[Sondra7]

I noticed an error in TurboTax Premier and am hoping someone can correct it before I file.  For my California State Tax return, I am getting a deduction for the Small Business COVID Relief Grant I received.  It shows up in Schedule CA (540) Section B Line 8z when I look at it in "Forms".  However, when I look at the PDF that is going to be submitted to the FTB, the description "small business Covid relief grant" is no longer there,  only the amount is displayed.  I'm worried the return will get kicked back for missing information.  

There is another form "California Other Income Statement", Schedule CA Section B Line 8z that has the same information but it is not included in the PDF being sent to the FTB.  

Thanks in advance!

[MarilynG1]

Yes, the California Other Income Statement is included in your tax filing.

So the statement in Section B, Line 8z will be included, even if not on the separate PDF.