USDA 1099G taxable grant offset deduction?

[p-c-k]

Where do I enter expenses to offset income from a taxable grant? I got a 1099-G from the USDA for an Environmental Quality Incentive Program I participated in through NRCS. This was a cost share conservation treatment program to improve my woodland and mitigate fire danger on my private property. I am not a farmer and did not have any monetary gain from the treatment program. It was a cost share program. The grant payment was about $19,600. I paid a forestry work contractor $20,000 to do the work. I am using Turbotax Deluxe 2020. Turbo tax entered the 1099-G info. on Schedule 1 line 8 there doesn’t seem to be a line item in the schedule Part II- adjustments to Income -that fits my situation. Seems like I should be able to file an exclusion or deduction.

[ThomasM125]

The grant income you mention would be considered "Other Income" from which you are not allowed to deduct expenses. Since you received a economic benefit from it, it is taxable income.

If you were in business, you could deduct the expenses as a cost of doing business, but you are not allowed to do that with personal expenses.

You can, however, add the costs to the basis of the property, and as such they will reduce a potential taxable gain if and when you sell the property.