Taxes on artist grant

[malindamarcel]

I received an artist grant for a project I completed in 2024. The award was from a regional arts council and I was asked to complete a w9. I do not know if this grant is taxable and if it is, I do not know what type of income it should be reported as. I would appreciate thoughts and guidance. And yes, I have read the IRS guidelines on grants to individuals, and am still unclear.

[SabrinaD2]

It depends. Generally, grants to individuals are considered taxable unless they meet specific criteria set by the IRS

• Since you received an artist grant from a regional arts council and completed a W-9, it is likely taxable. 
• *Specific Criteria for Non-Taxable Grant
  • Grants to individuals for travel, study, or other similar purposes are taxable unless:
    • Objective and Nondiscriminatory Basis: The grant is awarded on an objective and nondiscriminatory basis under a procedure approved in advance by the IRS and
    • Satisfaction of One of the following Requirements:
      • Scholarship or Fellowship: Used for study at an educational institution with a regular faculty and curriculum.
      • Prize or Award: Excludible from gross income under IRC section 74(b), if selected from the general public.
      • Specific Objective: Aimed at achieving a specific objective, producing a report, or enhancing a skill or talent.

If it's Taxable or you are still not sure here’s how you can enter it into TurboTax: TurboTax will guide through a series of questions to help you determine taxability.

Reporting Taxable Artist Grant Income

1. Determine the Type of Income: If the grant was for a specific project and you were required to produce a report or similar product, it is considered taxable income. This type of income is typically reported as self-employment income.
2. Form 1099-MISC or 1099-NEC: If you received a 1099-MISC or 1099-NEC, the grant amount should be reported on Schedule C (Form 1040) as business income

Steps to Report in TurboTax

1. Open TurboTax and navigate to your tax return.
2. Go to the search bar (magnifying glass icon) at the top right of the screen.
3. Type "1099-MISC" or "1099-NEC" in the search bar I
   • If you did not receive a 1099 - then go to magnifying class at top right of screen and Search for Schedule C and select the Jump to link.
4. Click the "Jump to" link that appears in the search results.
5. Enter the details from your 1099 form, including the total earnings reported.
6. Categorize your income: TurboTax will guide you through categorizing your grant income as self-employment income.

Additional Considerations

• Self-Employment Tax: Since the grant is considered nonemployee compensation, it may be subject to self-employment tax
• Documentation: Keep all documentation related to the grant, including the W-9 and any correspondence with the arts council, in case the IRS requests further information.

*Reach back out if you believe you meet one of the exceptions or received any other supporting tax documents and we can provide further guidance. 

Original post.