1099-MISC (non-education Grant)

[mrr6]

I received a 1099-MISC from the NC INSURANCE UNDERWRITING ASSOCIATION for a $6000.00 grant to help pay for a "Fortified roof" on my primary residence. The FATCA filing requirement box is NOT checked. Must I claim this as income on my 2020 taxes.

[JoannaB2]

It depends  The insurance reimbursement on 1099-MISC is reported as Other Income on line 8 ,Schedule 1.  Insurance reimbursement isn't usually taxable and is treated as compensation for your losses.  If you itemized your deduction, losses are reported on Form 4684 (Casualties and Theft )  on Schedule A (Itemized deduction) and any gain is reported on Schedule D.  If the adjusted basis (original price plus any improvement) is less than the insurance reimbursement, it may not be taxable if the money was spent towards replacement of the property.  

See,Form 4684 

[Opus 17]

This gets complicated and you may want to have this reviewed by a CPA.

The grant appears to be allowed if you have more than a 50% loss, presumably due to a hurricane.

If this is a hurricane loss, you can deduct the loss, but that has a high deductible and you may not actually get a tax benefit from your loss.  Then, if the insurance pays more than the amount of the loss, the difference may be taxable.  I can't tell you the best way to report this, you may want expert help. 

[mrr6]

There was no damage. This is a grant program that the NC Underwriting Association did for homeowners that live in specific areas prone to hurricanes (Outer banks of NC). It's cheaper to put fortified roofs on homes instead of paying for possible damage to the interior of a home.

Thank you for the reply.

[mrr6]

It was reported as other income on line 8. However, there was no damage. This is a grant program that the NC Underwriting Association did for homeowners that live in specific areas prone to hurricanes (Outer banks of NC). It's cheaper to put fortified roofs on homes instead of paying for possible damage to the roof and interior of a home should it be damaged by a hurricane.

Thank you for the reply.

[mrr6]

It was reported as other income on line 8. However, there was no damage. This is a grant program that the NC Underwriting Association did for homeowners that live in specific areas prone to hurricanes (Outer banks of NC). It's cheaper to put fortified roofs on homes instead of paying for possible damage to the roof and interior of a home should it be damaged by a hurricane.

Thank you for the reply.

[Opus 17]

If it's just free money, then it is taxable.

You can also add the entire cost of your roof to the cost basis of your home.  This may reduce your capital gains whenever you sell in the future.