Grant given for work-related research expenses-- taxable income?

[LonghornBadger]

I am a graduate student at a large research institution. Last year, I received a small research grant to cover the cost of laboratory supplies for my research work. The grant conditions indicate that these funds cannot be used as salary, i.e. they are not a payment for services provided.  The grant is not compensation for teaching/research as a graduate student. If I had not received these funds, my employer would have paid for the same items to conduct the work. The supplies it paid for are necessary for me to complete my graduate degree. It does not seem to me like this should be taxable income.

However, I was issued a 1099-MISC form for this research grant. Putting in the 1099-MISC form indicates that I owe a substantial amount of taxes on this (>20% of the total research grant amount). The closest question I can find in the  TurboTax 1099-MISC section entry to describe this situation is "I was in a research study, and this was the payment". This still makes it seem like this grant was compensation. 

Any help about how to report? Is this really taxable? 

[AmyC]

1. Yes, let's determine the taxable amount and the best way to report it.

2. Not all grants are taxable. For example, certain scholarships and fellowship grants may not be taxable if they are used for qualified education expenses.

If you incur expenses related to the grant, you may be able to deduct those expenses from your taxable income. For example, if you receive a grant to conduct research and incur costs for materials or labor, those expenses may be deductible.

from Topic no. 421, Scholarships, fellowship grants, and other 

You need to enter the 1099-MISC as it was reported and then we need to subtract out the legitimate expenses.

Let's enter the income. Follow these steps:

1. Log in to your return.
2. Go to income
3. Scroll down to Other Common Income
4. Select Income from 1099-MISC
5. Edit/ Start/ Revisit
6. Enter income -the income should be in box 3,
7. Enter tax if any withheld in box 4
8. Continue
9. Describe the reason -
10. continue
11. None of these apply
12. Continue
13. Did this involve main job?
14. No 
15. Continue
16. How often do you get?
17. Got in 2024 
18. Continue
19. Intent to earn money?
20. No
21. Continue
22. Do you have another?
23. No
24. Continue

Let's subtract out the qualified expenses:

1. Miscellaneous Income, 1099-A, 1099-C, Start
2. Scroll to the bottom
3. Other reportable income, Start
4. Other taxable income?
5. Select YES
6. Description 1099-MISC education expenses
7. Amount, enter your negative amount, for example -3,000
8. continue

 

[LonghornBadger]

Thanks so much Amy! This is exactly the type of guidance I was hoping to receive.