How to manage and file taxable research grant money?

Forum|Forum|5 years ago
June 13, 2020
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I received a large taxable amount of grant money from an organization. They tell me that I will have to file a W-9 and fill out a Schedule C-EZ for expenses. Ideally by the time I file my taxes, all of the money will be spent on research, the money does not go towards my income. First, does anyone have any recommendations on how to manage this money in preparation for filing? Also, would it be best to have it in a savings account, or possibly just cash the check?

Thanks in advance.

Not A Product Question

DavidS127

The Form W-9 you provide to the grantor gives them your "Taxpayer Identification Number" (social security number if you are self-employed). The grantor will send you a Form 1099-MISC to report the income granted to you.

If you are an individual conducting grant research as your business, you will report the grant as income and deduct the research expenses. You'll need TurboTax Deluxe Download/CD or TurboTax Online Self-Employed to file the Schedule C-EZ with the grant reported as income and the research expenses deducted.

The IRS recommends that you keep a separate bank account for your business, and that is the best way to avoid confusion about business versus personal expenses, and also keep a clear record of your business income and expenses. And, for a significant grant, some people use a separate bank account just for the grant, to make sure it is only spent for the intended purposes. Depending on the size of the grant, it may be worthwhile to keep the unspent balance in an account that pays interest income (e.g., a savings account).

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