How To Handle Grants

[Abigail]

I received grants from the state and now sure which year to claim them in. The items were placed in order Dec. 28, 2012, but I received them January 3, 2013. It's $900 worth of merchandise. How do I handle this?

[TomCopeland]

Grant income

I received grants from the state and now sure which year to claim them in. The items were placed in order Dec. 28, 2012, but I received them January 3, 2013. It's $900 worth of merchandise. How do I handle this?

Report this as income in 2013. Then claim the business portion of this as an expense on your 2013 tax return.

[Abigail]

All I received with my items was a packing list with the BILL TO: as my local CCRR office without any dollar amount details. The order date was 12.27.12 and shipment date was 12.28.12 and arrival to my daycare was 1.3.13

So nothing goes on 2012 for taxes? I'm unsure of the total dollar amount, but do know it's close to $900 as that was half my "allowance" to spend now and the other half in a few months when the program concludes.

[TomCopeland]

Grant income

All I received with my items was a packing list with the BILL TO: as my local CCRR office without any dollar amount details. The order date was 12.27.12 and shipment date was 12.28.12 and arrival to my daycare was 1.3.13

So nothing goes on 2012 for taxes? I'm unsure of the total dollar amount, but do know it's close to $900 as that was half my "allowance" to spend now and the other half in a few months when the program concludes.

Correct, nothing goes on your 2012 taxes because you didn't get the items until 2013. For 2013, report $900 as income (if that's the correct number) and then deduct the items based on how they are used in your business. If they are used 100% for your business, deduct the full amount. If not, apply your time-space %.

[Abigail]

So it's pretty much counting the $900 as income from the state then using the itemized shipment list to use as a purchase recept and write off each item in their category as an expense.

[TomCopeland]

Grant income

So it's pretty much counting the $900 as income from the state then using the itemized shipment list to use as a purchase recept and write off each item in their category as an expense.

That is correct.

[Unregistered]

Tom, what about other types of grants? I received grant money for conducting several reading groups for children. This was not connected to my day care. I assume I'd put it on form 1040 under "other income." Is that correct? But nothing was taken out of the payments - do I have to pay SS tax on these grants?
Thanks!