My wife is a teacher and received an $800 grant for her classroom. We received a 1099-misc and it is now being added to our income, is this right?

[btulloch10]

Since this grant was to essentially cover the supplies she purchased, do I need to add those items in as expenses to offset?

[MichaelMc · Accepted solution]

Yes. Report the Form 1099-MISC as self-employment income. Use the cost of classroom supplies and equipment purchased with the grant funds as expenses. Your wife should show neither net income nor a loss, and will not be liable for self-employment tax.