1099-NEC for a Student Grant

[Tannerscot]

Hello,

My partner (full time graduate student) was awarded a grant for $26,000 to assist with her dissertation research project. Expenses for this project included airfare and lodging, electronics, food for research participants, and also paying her research assistant about $7,200.

We received a 1099-NEC for this grant and when I input it in the personal income section in turbotax, it looks like the entire amount is taxable (the amount we owe shot up dramatically).

Is this correct, or can we deduct the research expenses mentioned above? If so, where do we deduct them as private folks (not a business)?

Do we need to issue the research assistant a 1099 MISC, and is the amount we paid her deductible for us?

Thank you for your help! (Who knew getting "free" money could create such a complicated situation!)

[PatriciaV]

Enter Form 1099-NEC under the Other Common Income topic, and use whatever description is accurate: "Research Grant," for example. After you enter the amount, the next screen will provide "uncommon situations" for this income. Check the box for "This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby." 

This choice avoids the need for Schedule C and will report the income on Schedule 1 Line 8z Other Income. The total from Schedule 1 Line 10 flows to Form 1040 Line 8 as ordinary income.

Yes, you should issue Form 1099-NEC to the research assistant (see below). Report this expense under the Other Common Income topic as summarized above, using a negative number for a "Research Assistant" entry. Your expense will offset the grant income on Schedule 1 Line 8z.

You can prepare Form 1099-NEC using Quick Employer Forms if you're using a business version of TurboTax. There are other online services that will do this as well.