SOLVED How to enter 2021 COVID California Relief Grant

[doninla]

Hi,

I'm a sole prop with a small business and I received the CA Relief Grant for small businesses in 2021. I believe it is to be taxed on Federal, but not State. I have not received a 1099, although I received the funds. How do I enter into Turbotax Desktop. Please note, I have Turbotax Desktop, not online.

Thank you.

Edit: Issue was resolved in the CA state portion of turbotax.

[DaveF1006]

Yes, it is taxable but since it is reported as Self-employed income, you may deduct expenses associated with the grant. To report in Turbo Tax Home and Business Desktop:

1. Open Turbo Tax
2. Select the Business tab
3. Choose what you work on.
4. Go to Business income and Expenses>profit and loss from Business>start
5. You will need to set up a business profile if you haven't done so already.
6. Once you finish the profile, you will reach a screen that says Your XXX Business.
7. Next select Business Income>start
8. Next will be several categories of income. For the Grant income, you will want to select General Income
9. Under the description, you will put  CA Relief Grant for small Businesses and the amount.

[doninla]

In case anyone else is dealing with this, my understanding is that the CA relief grant is taxable on Fed taxes, but not taxable in CA state.

[DM007]

Hi,

I have an S Corp and use TurboTax Business desktop version. How do I enter the $15,000 CA Relief Grant I received in 2021?

As I understand it is taxable on the Fed return, but tax-free on the CA state return.

How do I enter it so it increases my cost basis on my K1 and then not be taxable on the state returns?

Your help is greatly appreciated

Thanks!

[RobertB4444]

As @DaveF1006 says above -

Yes, it is taxable but since it is reported as Self-employed income, you may deduct expenses associated with the grant. To report in Turbo Tax Home and Business Desktop:

1. Open Turbo Tax
2. Select the Business tab
3. Choose what you work on.
4. Go to Business income and Expenses>profit and loss from Business>start
5. You will need to set up a business profile if you haven't done so already.
6. Once you finish the profile, you will reach a screen that says Your XXX Business.
7. Next select Business Income>start
8. Next will be several categories of income. For the Grant income, you will want to select General Income
9. Under the description, you will put  CA Relief Grant for small Businesses and the amount.

When you get to the California return there will be a question that will allow you to remove the grant from your taxable income.

[DM007]

Thanks for the reply. FYI, I have an S-Corp and not a sole proprietorship. I'm using TurboTax Business 2021 (desktop version).

There is no section named "General Income". Under Federal Taxes/Income/Other Income, I added CA Relief Grant for Small Business under "All other income".

When I go to the State Taxes section, there is no question that allows me to remove the grant. I went through all the questionnaires.

Can you please help?

[GeorgeM777]

@DM007  To follow-up on the response from @RobertB1326, you should see a section entitled "Other California Adjustments to Income" or similar wording.  You are correct in that your CA relief grant while taxable income on your federal return is not taxed by CA. 

The CA form that gets created when the relief grant is subtracted from your CA return is Form 540 CA Adjustments-Residents.  Here is a suggestion, click on "Forms" in the upper right side of your page.  On the left side of the page, near the top, click on Open Forms.  Enter CA 540 Adjustment-Residents and see if the form appears.  If it does, open it, and you will notice that column B is where the CA subtractions are entered.  It would appear that you will enter the relief grant subtraction on line 8(f).

[jrlakers84]

I haven't received the 1099 from the California relief grant. will this be an issue with IRS later on, since I don't know the exact Payer's name nor the Payer's Federal ID #? Does anyone know this information, and if not, will I be ok if I just guess the name and put a generic Payer ID #?

[JulieS]

No, this will not be an issue with the IRS as long as you report the amount of the grant as income received whether that is taxable or non-taxable income. You do not have to enter the amount as a 1099-G, as long as the amount received is accurate..

If you are not sure exactly how much you received, check your bank records, or check with the agency that gave you the grant.

[Paul De Rouen]

How to enter 2021 COVID california Relief grant

[MikeM44]

The question (and mine) has to do with an CA S-Corp return and the correct method to enter an adjustment to show a CA Small Business Covid Relief Grant on an SCORP return, not a personal return!  The CA Adjustments Form is for a PERSONAL return only.   

On the FEDERAL S-Corp return, both a PPP forgiven loan and the CA grant need to be included, but only the CA grant is taxable on the Federal return

Intuit (turbotax) has done a VERY POOR job of handling both the PPP loan forgiveness and the CA grant income on both the Federal  S-Corp return and the CA return. Frankly they should be ashamed on themselves.  I have wasted hours on this issue.

[PatriciaV]

For an S-Corp, you may report a California Relief Grant on Form 100S as follows:

1. Negative amount on 100S pg4-6 Schedule F, Line 5, with appropriate description
2. Positive adjustment on Schedule M-1, Line 5b
3. Positive adjustment on Schedule M-2, Line-3, column (b)

[KisaA]

Hi everyone!

2021 CA Relief Grant is NOT taxable on CA return.  How to modify 565 form to remove this income (This grant in added as Other income on form 1065).   yjanks

[Kate6]

Patricia, your reply:

"For an S-Corp, you may report a California Relief Grant on Form 100S as follows:

1. Negative amount on 100S pg4-6 Schedule F, Line 5, with appropriate description
2. Positive adjustment on Schedule M-1, Line 5b
3. Positive adjustment on Schedule M-2, Line-3, column (b)"

The problem with this, it reduces the shareholder basis if we do it this way and it does not reflect anywhere on the K-1 and does not reflect properly on the basis statement.  But tax exempt income should increase basis.  Any idea how to properly record this @PatriciaV 

[ACTIONTEAM1689]

still need help to figure out how enter the ca relief grant ($15,000) on a s corporation returns for both federal and state so it calculate the the K-1s, and the basis worksheet correctly.  thank you so much in advance.