Is grant funds from a charitable trust used for K-12 expenses recorded as income, or recorded another way?

[gems7798]

We received some money as members of an educational association that received a grant from a foundation to help area homeschoolers with education related expenses.  I'm assuming this needs to be recorded as income, but I wasn't sure since reception of the money requires it be spent on education related and it was.  

If it should be recorded as income, is it just under Less Common Income--Miscellaneous Income?  

I did not receive any sort of official tax form regarding the distribution, simply a letter stating the full amount distributed to the association and then the check itself.

[DaveF1006]

It depends on the nature of the grant. I researched this topic and couldn't find a clear answer but I did find this IRS publication that could provide some guidance.

What it states is if the charitable foundation that offered the grant is a a tax-exempt charitable organization, their contributions do not need to be reported as gift tax.  In addition, individuals receiving assistance are not generally subject to federal tax on the value of assistance they receive from a charity to meet their personal needs.

Rather to report this as income, you must ask yourself is if you were a victim of disaster or in an emergency hardship situation. If  the homeschool was a result of COVID for example, this was an emergency hardship situation. The publication also mentions other hardship situations such as  sudden illness, death, accident, violent crime or other emergency hardships.

However, if your money received was not because of an emergency hardship and if you feel compelled to report. 

1. Go to federal>income and expenses>all income>>show more 
2. Less Common Income> Start
3. Miscellaneous Income,>start
4. Other reportable income>start
5. Next screen asks Any Other Taxable Income>yes
6. The next screen will allow you to report the income with a brief explanation.

[gems7798]

So since the education association that we received the funds from is a 501c3 and the funds were used for needs (educational), we do not report the amount as income.  Do I have that right?    Thank you so much!

[DaveF1006]

Yes, that is correct. Since the organization is a 501(C)(3) tax exempt organization, individuals receiving the grant are  generally not required to report the grant as taxable income. Please read that IRS publication link I included in my previous answer for more details because it suggests that to be entitled to the funds and not pay was a result of an emergency hardship that required you to homeschool your children.

[gems7798]

Thank you.  I will be sure to study it further with your link.

[KrisD15]

Additionally, I would assume the organization could supply an answer as of the taxability of the funds.