I received a Fulbright & reporting it as income for teaching. I am sole proprietor and lecture for a fee & want to include grant as business income & deduct expenses. ok?

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April 7, 2024
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I received a Fulbright grant and am reporting it as income given it was for teaching - compensation for lecturing and teaching, personal services. I would like to include the income as business income, given I am sole proprietor and do consulting and lecturing for a fee. As a sole proprietor, I would like to deduct the expenses for living abroad for the three months. Can I include the stipend as income and, therefore, deduct my expenses?

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ThomasM125

Per this excerpt from an IRS article on Fulbright Grants, such income if for teaching abroad is normally considered wage income as opposed to self-employment income:

If it is wage income, you cannot deduct expenses associated with it.

What distinguishes wage income from self-employment income is typically the amount of control the employer has over the worker. If the worker can set his own hours, uses his own tools and other work resources, performs similar services for other employers, in general behaves as a self-employed business person then the work may be considered self-employment as opposed to salary work. If so, you can treat the income as self-employment income and deduct expenses that are ordinary and necessary for the conduct of the business.

Here is a link to an IRS article you may find helpful: Independent contractor or employee?

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mangorocksAuthor

Thank you, that is helpful. I had understood that the work was to be taxed, but as I had control of the timing of the visit, arranged the hours, dates, and content of the lectures, I was behaving as a self-employed person. Additionally, I did some research in the visit, which are going into publications that advance my business profile and marketability/expertise as a consultant. Does any of this additional information shift the work to self-employed rather than wages? Thank you.

PatriciaV

If you feel you have sufficient evidence to report this as self-employment income, then you may include this as business income as a self-employed educator. Contemporaneous records of independent planning, research, scheduling, hours worked, etc., are valuable support for this treatment.

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