Grant fund and research expenses

[urban-hipo]

Hello,

I am a graduate student at a large academic institution, and have been receiving a scholarship for the last few years. Generally, this scholarship is 'room and board' and so I treat it as income reported under 'uncommon income', and non-qualifying scholarships. My question is not on this scholarship.

This year, I received a large sum of money for conducting research towards my degree. These funds are for the purpose of writing my dissertation. They are not used for room and board, food, or travel. Instead, I use them for activities such as buying data, supplies, to pay for research assistants, and make other research expenses (conference registration fees, etc). I need to maintain a list of such expenditures, and submit them to the foundation supporting my research at the end. I am not required to provide a specific report, but the funds are made to allow me to finish and publish my dissertation and academic work.

There is no 'syllabus' for this, and other graduate students have fewer / more expenses. So I am not sure if these are 'qualifying' expenses...

Importantly, these aren't compensation for teaching/research as a graduate student (that's the scholarship I first mentioned). 

I did not receive a 1099-NEC, or any other tax form. If it were a business, I could easily deduct all the expenses and have no income left over. Whatever I will end up not using, I will have to return at the end.

This is a big amount of money relative to my income (grad student...), and so leaves me with a significant tax obligation.

Any help on how this should be reported and if I can treat this not as income. It seems crazy to me that I should pay taxes for what I spend on others' salaries, or have to pay back...

[AmyC]

 Most grants are not taxable, but please check in Topic no. 421, Scholarships, fellowship grants, and other grants. Here is what it says: 

Tax-free

If you receive a scholarship, a fellowship grant, or other grant, all or part of the amounts you receive may be tax-free. Scholarships, fellowship grants, and other grants are tax-free if you meet the following conditions:

• You're a candidate for a degree at an educational institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities; and
• The amounts you receive are used to pay for tuition and fees required for enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment required for courses at the educational institution.

Taxable

You must include in gross income:

• Amounts used for incidental expenses, such as room and board, travel, and optional equipment.
• Amounts received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant. However, you don't need to include in gross income any amounts you receive for services that are required by the National Health Service Corps Scholarship Program, the Armed Forces Health Professions Scholarship and Financial Assistance Program, or a comprehensive student work-learning-service program (as defined in section 448(e) of the Higher Education Act of 1965) operated by a work college.

[Hal_Al]

I'm of the opinion that you have nothing to report on your taxes.  The foundation is simply funding the expenses. It's essentially an "accountable reimbursement plan". 

I based that opinion on your own description of the funding:

"I did not receive a 1099-NEC, or any other tax form. If it were a business, I could easily deduct all the expenses and have no income left over. Whatever I will end up not using, I will have to return at the end."

"Instead, I use them for activities such as buying data, supplies, to pay for research assistants, and make other research expenses (conference registration fees, etc). I need to maintain a list of such expenditures, and submit them to the foundation supporting my research at the end."

"Importantly, these aren't compensation for teaching/research as a graduate student (that's the scholarship I first mentioned)."