501 C 3 is giving me a medical grant to cover medical expenses

[LolaG]

They are asking me to fill out W9. Isn’t that for contractors or as work performed? 
is there another form instead of W9 I should fill out? 
Also, the question before was answered and it was solved as not taxable. Is that still correct for 2024? 
if the money is received in 2024 does it only apply or have to be spent in 2024 to that year or can it be applied to 2025? I haven’t received it yet. 2024 almost over! 

[Opus 17]

It seems they want to issue you a 1099 form (probably a 1099-MISC).  That means that either they think the grant might be taxable income to you, or at least, they are taking no chances with their tax return and leaving the tax issue up to you.

Whether this is some form of taxable income or a tax-free gift depends on what you have to do to get the money.  We would need more details to think about that.

If you get a 1099-MISC, but you think the money should not be taxable, there is a way to zero out the 1099 on your tax return.  

If they are giving you a no-strings gift, then it doesn't matter (to the IRS) what you do with the money or when, unless you have a contract with them that requires you do something.   If the money is taxable, you pay tax for the year when you receive the money, even if you don't spend it.  If it is not taxable, but you get a 1099, then it is reported and zeroed out for the year when you actually get the payment.

Lastly, if you pay medical bills with money that you did not pay tax on, you can't take a tax deduction for those medical expenses. 

[LolaG]

I applied for the grant due to rare medical disease. It is a legit National organization. Nothing else was required. I was picked with others that applied. They sent me a request to fill out a W9 before they send the money. I thought W9 was for workers, contractors or freelancers. I don’t want to fill out the incorrect form. I think they are using it for their reporting. I agree they are leaving it up to me to figure out my taxes. Thanks in advance. Does this help with more info? 

[Mike9241]

In general, amounts granted to an individual solely out of the payor’s “detached and disinterested generosity” are treated as “gifts” that are excluded from tax under section 102 of the Internal Revenue Code. The IRS has confirmed that a payment made by a charity to an individual that responds to the individual's needs (in order words, is motivated by charitable intent rather than any moral or legal duty) qualifies for this exclusion, and consequently is not subject to Form 1099 reporting. See Revenue Ruling 2003-12.

As further explained by the IRS in Publication 3833, some grants to individuals will not meet the requirement of being motivated by charitable intent, such as where the charity receives services or some other economic benefit in return for the payment.

only the charity can tell you why it requested a w-9

[Opus 17]

---

@LolaG wrote:

I applied for the grant due to rare medical disease. It is a legit National organization. Nothing else was required. I was picked with others that applied. They sent me a request to fill out a W9 before they send the money. I thought W9 was for workers, contractors or freelancers. I don’t want to fill out the incorrect form. I think they are using it for their reporting. I agree they are leaving it up to me to figure out my taxes. Thanks in advance. Does this help with more info? 

---

In general, a "business" must issue a 1099 of some kind, if they pay more than $600 to another person or business.  The W-9 is used to collect the SSN of the recipient before issuing the payment.  The charity's treasurer or bookkeeper is probably following a policy of asking for a W-9 from everyone they do business with, and leaving it up to the individual recipient to determine if the payment is taxable or not.  The charity can get in trouble for failing to issue a 1099 when it is required, but they don't get it trouble if they issue one when it is not required, so they are covering their own backsides.

You likely won't get a payment if you refuse to return the W-9.

You would then expect to get a 1099-MISC by January 31, 2025 (if the payment is made before 12/31/2024).  Since a gift of this type is not taxable to you, there is a way to zero out the income when you file your tax return.