My wife completed a PhD program in 2021. In 2023 she is an adjunct faculty member at the same institution that conferred her degree. In TY2022, she was no longer a student for the first time in ... a long time, and did not have any sources of income, except...
In 2022 she accepted a small research grant ($1,500) from an academically focused non-profit interested in her field of study to subsidize the cost of trip to study an artifact she wanted to publish a paper about. She took the trip, studied the object, wrote the paper, and submitted it to the non-profit, per their request. It has not otherwise been published, yet. They sent a 1099-MISC with the full amount of the $1,500 reported in box 3. My understanding is that it was not a strict requirement of the grant that she publish or provide the paper, although they requested to have a copy if/when it was completed.
Initially, I entered the income as an independent contractor would, creating a new Schedule C business for my wife called, "Research Grant" (NAICS Code 541720 if anyone is curious). My intention was to document enough of her actual qualifying travel and lodging expenses to offset the amount of the grant, which is easy because the trip significantly exceeded the amount she received and was solely focused on this research work (traveled solo, did no tourist things). What I noticed was that, to the extent her expenses exceeded the income from the grant, they continued to lower our tax due based on income from my Schedule C business (I am a Realtor). This got me thinking that income from a research grant really isn't like running a business for profit, but it's also not really an education expense, or a hobby...
If she were a full-time student, I know that I would enter this income and the associated expenses along with the info from her 1098-T, but since that no longer applies - can anyone tell me:
1. Does this income belong on a Schedule C?
2. Is it intended that losses from her "business" should offset gains from mine?
3. If no to 1 & 2, where does this income belong? I assume the grant money should not generate tax due for us because her qualified expenses significantly exceeded the amount of the grant (roughly 200% just for airfare and lodging).
Thanks in advance for any thoughts!
