A taxpayer may receive a taxable grant from a government agency such as the Small Business Administration (SBA) or from a nonprofit organization. The grant doesn't require repayment since it's not a loan, but the taxpayer does need to account for how the grant was used and does need to report it on their annual tax return.
If the grant relates to activity being reported on Schedules C, E, or F, or Form 4835, then it will be reported on the form to which it relates, otherwise it is reported as Other Income on Schedule 1.
In TaxSlayer ProWeb, how you enter the taxable grant in the tax depends on the tax year and the activity to which it relates:
- Tax years 2023 and forward:
- If the taxable grant relates to activity being reported on Schedules C, E, or F, or Form 4835, enter it on that form or schedule as Other Income. Don't enter it in the Form 1099-G menu. Also include a Preparer Note in the return explaining where the 1099-G grant income has been included in the return.
- If the taxable grant doesn't relate to activity being reported on Schedules C, E, or F, or Form 4835, enter the Form 1099-G in its menu and the income will flow to Schedule 1 as Other Income.
- Tax years 2022 and prior, enter the Form 1099-G in its menu then proceed as follows:
- If the taxable grant relates to activity being reported on Schedules C, E, or F, or Form 4835, enter it on that form or schedule as Other Income.
- If the taxable grant doesn't relate to activity being reported on Schedules C, E, or F, or Form 4835, enter it as Other Income.
For detailed instructions, select the appropriate year below:
2023 and forward
If the taxable grant does not relate to activity reported on Schedules C, E, or F, or Form 4835, from the Federal Section of the tax return (Form 1040) select:
- Income
- Form 1099-G Box 1
- Add or Edit a 1099-G - Enter the payer information.
- Taxable Grants - Enter the amount in Box 6.
- Enter state information if it's on the form.
The amount in Box 6 will flow to Other Income on Schedule 1.
Otherwise, if the grant relates to the taxpayer's business or rental activity, report it as Other Income on the form or schedule reporting that activity per the steps below, and include a Preparer Note in the return to explain how the 1099-G is being treated.
Schedule C
If the grant relates to the taxpayer's business activity normally reported on Schedule C, include the grant on that schedule as Other Income. From the Federal Section of the tax return (Form 1040) select:
- Income
- Schedule C, Profits or Loss from Business
- Income
- Other Income
Schedule E
A landlord who receives rental payments from a nonprofit assisting tenants treats those payments as rental income. To enter these receipts in Schedule E, from the Federal Section of the tax return (Form 1040) select:
- Income
- Schedule E
- Rent and Royalty Basic Information
- Rental Payments Received - Include the total grants with other rental payments.
Schedule F
If the grant relates to the taxpayer's business activity normally reported on Schedule F, include the grant on that schedule as Other Income. From the Federal Section of the tax return (Form 1040) select:
- Income
- Schedule F
- Income
- Other Income
Form 4835
A grant from a government program or nonprofit for the rental of farmland is reported on Form 4835. From the Federal Section of the tax return (Form 1040) select:
- Income
- Other Income
- Farm Rental Income and Expenses
- Other income
2022 and prior
Step 1: Enter the 1099-G
From the Federal Section of the tax return (Form 1040) select:
- Income
- Form 1099-G Box 1
- Add or Edit a 1099-G - Enter the payer information.
- Taxable Grants - Enter the amount in Box 6.
- Enter state information if it's on the form.
Step 2: Enter the grant amount where it belongs in the return
Enter the grant income in the form or schedule where it belongs.
Schedule C
If the grant relates to the taxpayer's business activity normally reported on Schedule C, include the grant on that schedule as Other Income. From the Federal Section of the tax return (Form 1040) select:
- Income
- Schedule C, Profits or Loss from Business
- Income
- Other Income
Schedule E
A landlord who receives rental payments from a nonprofit assisting tenants treats those payments as rental income. To enter these receipts in Schedule E, from the Federal Section of the tax return (Form 1040) select:
- Income
- Schedule E
- Rent and Royalty Basic Information
- Rental Payments Received - Include the total grants with other rental payments.
Schedule F
If the grant relates to the taxpayer's business activity normally reported on Schedule F, include the grant on that schedule as Other Income. From the Federal Section of the tax return (Form 1040) select:
- Income
- Schedule F
- Income
- Other Income
Form 4835
A grant from a government program or nonprofit for the rental of farmland is reported on Form 4835. From the Federal Section of the tax return (Form 1040) select:
- Income
- Other Income
- Farm Rental Income and Expenses
- Other income
Other Income
If the grant is unrelated to a taxpayer's business, enter it as other income. From the Federal Section of the tax return (Form 1040) select:
- Income
- Other Income
- Other Income Not Reported Elsewhere
- Other Income Description - Select Other Income
- Amount of other income - Enter the amount of the grant.
Step 3: Enter a Preparer Note, if needed
If you reported the grant on Schedule C, E, or F, or Form 4835, from the Federal Section of the tax return (Form 1040) select:
- Miscellaneous Forms
- Explanations
- Preparer Notes - Enter a title, e.g., Form 1099-G taxable grants, and a note explaining how it is being handled in the return.
Note: This articles provides navigational guidance for entering taxable grants in TaxSlayer ProWeb. It is not intended as tax advice.