I received a grant and have a 1099-MISC for it. Do I also include that grant in my education/scholarship section?

[GeoffreyG · Accepted solution]

You are correct that you do need to pay income taxes on your grant income, as reported to you on Form 1099-MISC.

However, although you must pay ordinary income taxes on this income, you do not have to pay Social Security and Medicare taxes on it as well, as you would if this were instead self-employment income.

Academic institutions, research facilities, and certain government agencies will often report grant, fellowship, and scholarship income in various or nonstandard ways, especially at the graduate and postdoctoral levels.  It's certainly not an uncommon occurrence; but yes, the grant you received is definitely considered taxable compensation.  As such, you do (legally) need to declare it and report the information on your income tax return.

This can be accomplished in the TurboTax program, both in the online (web-based) software as well as in the desktop versions of the program.

The mechanical steps to do so are outlined at the following AnswerXchange post from a few years ago.  Ignore the fact that the income was shown on a Form 1099-MISC (as this can lead you into the wrong area of TurboTax), and instead follow the steps outlined here:

https://ttlc.intuit.com/questions/2638576-how-to-report-a-fellowship-stipend

Those general processes remain accurate for the current (2016) tax year of the TurboTax program (i.e., either of those described will work just the same).

Both as a test of this, and as demonstrable proof for this answer, I ran a (hypothetical) grant of $3,000 through the federal tax program.  In fact, I did it in both of the ways described on that other post, and the results came out just as expected, without any errors present.  (Please see the attached screen-capture image for a visual aid; simply click to open.)  As desired, the notation "SCH" appeared on Line 7 of Form 1040, and the $3,000 test amount was added to taxable wages.

I have full confidence that this method will work for your tax return, too.  Just substitute the actual grant income total you have for the $3,000 used in the demonstration example.  The good news is that, as we noted above, while your fellowship income is taxable as ordinary income, at least you do not have to pay Social Security and Medicare taxes on it, as you would if the income were alternatively taxed as ordinary W-2 wages, or as self-employment income.

Thank you for asking this important question, and good luck with your professional activities.

[smk51]

Thank you so much for this answer! Within the Miscellaneous Income section, there are a few options. Do you know which one I am supposed to use?

[GeoffreyG]

Hello smk51:

Yes, there are several options in the Miscellaneous section -- it's a sort of "catch all" category.  But, if you keep clicking through them all, you'll eventually reach one called Fellowship income.  If you input your Grant, Fellowship, Scholarship, or Stipend there, the dollar amount will then appear on Form 1040, Line 7, with the abbreviation "SCH" which is the end goal.

The alternative is to make your similar entry through the Deductions -> Education interview path in TurboTax (but many find the Income -> Miscellaneous route easier and more intuitive).

Thank you for asking about this clarification.

[maglib]

just added information that is often confusing.  The scholarships and grants in excess of qualified education expenses are considered both earned and unearned income for kiddie tax purposes.  If you are a student under 24 who is full time you will have to file a return if the income and other unearned income is in excess of $1,050 due to unearned income tax rules.  You will only owe taxes to the extent though your total earned, inclusive of excess over eduction, exceeds your standard deduction (single student this year $6,350).  You must still file a tax return if under 24 years old and amounts are over $1,050 even if not owing taxes.  

[Neyegirl]

Thanks this was really helpful. I also receive a grant from a non profit that is awarded to me for payment towards student loan debt. They send a 1099 MISC form and I have been using Turbotax for years and always had an issue reporting this as income but not as self employment. I never found a work around until this post despite searching for help. Choosing the MISC 1099 form option always led me down the wrong path. 

This option also worked on the app version which I used this year to file.

Is there anything I should do for all the prior years where this was placed under self employment erroneously? I'm guessing it's just a loss at this point.

Thanks.

[DR55]

What if the grant is for covid relief but they also gave me a 1099 for an S Corp?

[DaveF1006]

it depends. What kind of a grant is it? Is it an educational grant or a grant for your business? Was the 1099 issued from an S-Corp or to an S-Corp that you are a shareholder of? Please let me know the details of your grant so we can clarify our response to you.

[Edited 03-07-2021|6:17 PM PST]