I received a COVID relief grant for my sole proprietorship and have a 1099-g for it. Where do I report it in Turbotax--is it just a line in my business income, or is there a form for a 1099 such as this one?
It should go on the other income line of you business return. In TurboTax, go to your self employment income, click on uncommon income then enter the description and amount. That should do it.
Here is a link to a small business pandemic relief Initiative page.
The pandemic has affected your taxes in many ways. Including reporting in TurboTax the amount of stimulus money you received. Click Here for more information on how the Pandemic affected your 2020 taxes.
Question to Expert:
What about once entering the grant description & info the question: Did the Small Business Relief Grant involve an intent to EARN money? Common sense is telling me YES but reading more into it a grant isn't really EARNED money.. Is it?
No, a relief grant is not an intent to earn money. A research grant, for instance, is more likely to have the intent to earn money.
My Tax Accountant told me that this information is incorrect and that we should report the 1099-G Grant on our 1040 and not on the Business Schedule C as other Income. She explained that her Lacerte software advises to do it this way and she said that if we report it on the Business Schedule C that it will result in additional Self-Employment taxes being taken out for the grant since it increases are business income. Which information is correct?
Intuit's Lacerte support says that the 1099-G grant gets reported on the 1040 line 8, not the Schedule C:
How to enter CA stimulus, PPP, & grants in Lacerte (intuit.com)
The IRS.GOV website seems to agree with what the person above says though - to report it on the Schedule C. Again, which is the correct answer. If we report it on Schedule C, then it gets hit with Self Employment tax. If we report it on 1040, Line 8, then it does not get hit with Self Employment tax:
A. Yes. The receipt of a government grant by a business generally is not excluded from the business's gross income under the Code and therefore is taxable. However, a grant made by the government of a federally recognized Indian tribe to a member to expand an Indian-owned business on or near reservations is excluded from the member's gross income under the general welfare exclusion.