1099 G Taxable Grant and schedule E

[robetax]

I received a 1099-G Taxable Grant.  Is there any way to link this payment to a Schedule E as it was for rent.  

[KrisD15]

To clarify, which box is the payment entered in on the 1099-G? 

How did a Grant pay for your rental? 

[robetax]

Box 6 

[robetax]

Box 6.  Tenant applied for rent assistance due to the pandemic.  The money received was for 3 months of rent that the tenant did not pay.  

[Vanessa A]

This is rental income, so yes, it should be reported on your Schedule-E.

As you walk through the income entries, you will just include the amount reported on the 1099-G as part of the rental income instead of listing it under the 1099-G section.  

[robetax]

That sounds great and is what I want to do.  But, was a copy of this 1099-G sent to the IRS and want they be comparing my tax return and looking for that 1099-G income?

[Vanessa A]

Yes, a copy was sent to the IRS. If you would happen to get a letter asking about the 1099-G, just respond and let them know it was entered with the rental income. This should be no different than a business getting a 1099-Misc, it is expected that the income on that 1099-Misc is already included in the income.  If the income is less than the 1099-Misc, then it would raise a flag, if not, then all is well.

If you report it as a taxable grant instead of rental income, your rental income would be lower, which is inaccurate.  But, there is no way to directly link the 1099-G to the Schedule -E at this point. 

[robetax]

Can the amount of 1099-G income be included as rental income, 1099-G income, and then entered as an adjustment on Line 24 z as other and if so what is the "type"?  Would rather not get a letter from the IRS and delay processing of return.

[Hal_Al]

Q.  Can the amount of 1099-G income be included as rental income, 1099-G income, and then entered as an adjustment on Line 8z of Schedule 1 (not line 24 z ) as other income and if so what is the "type"? 

A.  Yes. that's an alternate way to do it.  But I wouldn't.  Your situation is common enough, these days, that an IRS letter is unlikely.  

If you received an erroneous 1099, you have several choices (your 1099-G is probably not erroneous, but the procedure is the same):

1. Ideally, you get a corrected 1099 from the payer (unlikely in your case)
2. Don't report it on your return (except on Schedule E). Attach a copy of the 1099 and a statement explaining the circumstances. You can't e-file. From the IRS instructions for form 1099-Misc: Form 1099-MISC incorrect? If this form is incorrect or has been issued in error, contact the payer. If you cannot get this form corrected, attach an explanation to your tax return and report your income correctly.
3. Report the income as misc line 8z, Schedule 1 income (enter in TurboTax at the 1099-G) Then enter a line 8z deduction, for the same amount.  In TurboTax (TT), enter at:
   - Federal Taxes tab
    - Wages & Income
   Scroll down to:
   -Less Common Income
         -Misc Income, 1099-A, 1099-C
          - On the next screen, choose – Other reportable income -  Answer yes to Any other Taxable Income -On the next screen, Enter the number with a minus sign (-) in front.  Briefly explain at description. Call it something like "1099-G income reported on Schedule E"
4. Do nothing and hope you can explain it away when & if the IRS contacts you

[robetax]

Thanks Hal,

I went with number 3.  Shows up clean on Schedule 1 with explanation for action.  

[tammyppllc]

I ended up selecting "Other 1099-G" under the income section. I entered the grant amount from box 6 there. It went to schedule 3 then on the same line as rental income on my 1040, combined. So, my rental income on Schedule E was less (because I didn't report this grant money there) but the end result was the same. I don't like it because I think rental income should be on Schedule E, but the HOPE contact says they were correct issuing a 1099-G. I have accepted government assisted rent payments many years and always got a 1099 Misc. This time they say I don't know what I am talking about.

[Jpauer]

I actually have a follow up question.  I am a property manager and helped one of my tenants get housing assistance.  I sent my client (the property owner) a 1099 for all rent collected (including the money from the assistance program).  However i received a 1099-g from the county program.  I dont want to be taxed on income that I didnt actually receive.  It was for rent paid to the owner of the property.  How do I account for this?

[KrisD15]

To clarify, as a Property Manager, do you file Schedule C? 

If yes, report the 1099-G as Schedule C income, and then the same amount as an expense. Name it something like "rent forwarded to owner"