1099-G for COVID Grant

[Lanric02]

My sole proprietorship (not my name but my business name) received a 1099-G for a COVID Grant from the state (which is not taxable on the state return).   

In Turbotax Home and Business, Where does this get reported?   If its in the business section under my sole proprietorship, won't that then appear in taxable business income on the NJ state return?  It should not be taxable to the state.   Or, should I record it where 1099-G's get reported in the personal income section?

Also, if I include it in the business section, won't that make it subject to self-employment tax, whereas if I record it in the 1099-G section of personal income, it wouldn't be subject to self-employment tax?

[DawnC]

If you have a 1099-G with an amount in box 6 (Taxable Grants), enter it in the personal section.   When you go through the state return, TurboTax won't tax it if it is a NJEDA (New Jersey Economic Development Authority) grant.    There is not a place to enter a 1099-G in the business income section, but yes, if it were entered in the business income section on the federal return, it would also show up as business income on the state return.    And yes, it would generate self-employment tax.  

Don't enter it with the Unemployment or Paid Family Leave 1099--Gs.   Use the OTHER 1099-G category in the Other Common Income section, then your state return will give it the proper tax treatment.  

[Lanric02]

Thanks.  It doesn't matter that the 1099-G is made out to the Business name with the business EIN?

[DawnC]

No, it won't matter - the grant is non-taxable and your business return, Schedule C with the EIN, is getting filed with your personal return.   

From -  NJ Division of Taxation

New Jersey Economic Development Authority (NJEDA) grants and tax credits are not subject to tax under the New Jersey Gross Income Tax Act and the Corporation Business Tax Act. The same is also true for grants; including, but not limited to; county issued COVID-19 related grants, shuttered venue operator grants, Division of Fish and Wildlife CARES Act Fisheries Assistance Program grants, Child Care Provider COVID-19 Stabilization Grants, and Restaurant Revitalization Fund grants.   Do not report excluded grant or credit income on a New Jersey Gross Income Tax or Corporation Business Tax return.