Where/How Do I Record An Awarded Grant?

Hello. I was awarded a grant to use to purchase items to update my home daycare. I am not sure how to go about recording this. If I record the grant as additional income and the purchases I made as daycare purchases only a percentage of the grant income will be deducted (all was used for daycare purchases ie manipulatives, curriculum, etc.). If you have any advice that would be great. Thanks.

[TomCopeland]

Originally Posted by Unregistered

Hello. I was awarded a grant to use to purchase items to update my home daycare. I am not sure how to go about recording this. If I record the grant as additional income and the purchases I made as daycare purchases only a percentage of the grant income will be deducted (all was used for daycare purchases ie manipulatives, curriculum, etc.). If you have any advice that would be great. Thanks.

You must report the grant as taxable income on Schedule C. You can deduct as a business expense items you purchased with the grant by following the normal rules of deductions. So, if you use the items purchased for both business and personal reasons, you'll deduct the time-space% of these items. Therefore, your deduction will be less than your extra income and you'll pay a little more in taxes as a result. If the items you purchased were used exclusively for your business then you can deduct 100% of the cost and your income and expense will wipe each other out and you won't owe any more in taxes.

Thank you for your help!!

[daycarediva]

If I report the grant I just received as income ($500) and then deduct what I spent of the grant ($499.97), I only get a percentage of that as deductions (I don't even think it's 50%) . I LOSE money on that. It wasn't actual income- it's not cash, I can't spend it on anything non daycare related, and it was given as a credit towards a school supply website.

So...grants are costing me money. Wow. Way to go US government!

[TomCopeland]

Originally Posted by daycarediva

If I report the grant I just received as income ($500) and then deduct what I spent of the grant ($499.97), I only get a percentage of that as deductions (I don't even think it's 50%) . I LOSE money on that. It wasn't actual income- it's not cash, I can't spend it on anything non daycare related, and it was given as a credit towards a school supply website.

So...grants are costing me money. Wow. Way to go US government!

If you used the items for both business and personal use, then, yes, you had to pay out cash in additional taxes. But, if your business use was 50%, you got these items at a 50% discount.

[Mom2Two]

Did they actually give you cash? For our toy grants, we send in an order form and our CCR&R just has the company send us the equipment. I'm just realizing now that I'm glad they do it this way so I don't have to worry about reporting it.

We also get a cash grant each year (if we meet the requirements) and that is just straight income.

[lovemykidstoo]

I'm wondering this too. I'm in Michigan and am applying for a grant. I have to list everything that I"m going to get, but I do think they mail me a check and I'm expected to use the money for the items listed. So you're saying if it's things used for daycare only I can deduct that 100% as both an income and an expense? Then something like a computer I would deduct a percentage? How do I determine what percentage for that?

[daycarediva]

Originally Posted by Mom2Two

Did they actually give you cash? For our toy grants, we send in an order form and our CCR&R just has the company send us the equipment. I'm just realizing now that I'm glad they do it this way so I don't have to worry about reporting it.

We also get a cash grant each year (if we meet the requirements) and that is just straight income.

Yup, have to claim the 'credit' I receive as income. I just don't take the grants anymore bc it isn't worth the tax implications. Just got a $500 Kaplan or Becker credit, but would have to report it as income, then the toys (which I technically did not buy, and do NOT have a dollar amount receipt for- as expenses) Not cool, imho.

[TomCopeland]

Originally Posted by lovemykidstoo

I'm wondering this too. I'm in Michigan and am applying for a grant. I have to list everything that I"m going to get, but I do think they mail me a check and I'm expected to use the money for the items listed. So you're saying if it's things used for daycare only I can deduct that 100% as both an income and an expense? Then something like a computer I would deduct a percentage? How do I determine what percentage for that?

Yes, if you use the grant money to buy something used 100% for your business you can deduct 100% of the expense. If you use it for both business and personal purposes, apply your Time-Space Percentage to the amount. See my article:

[lovemykidstoo]

Originally Posted by daycarediva

Yup, have to claim the 'credit' I receive as income. I just don't take the grants anymore bc it isn't worth the tax implications. Just got a $500 Kaplan or Becker credit, but would have to report it as income, then the toys (which I technically did not buy, and do NOT have a dollar amount receipt for- as expenses) Not cool, imho.

So if you got the grant, why wouldn't you buy the toys? Then there would be no tax implication right?

[TomCopeland]

Originally Posted by lovemykidstoo

So if you got the grant, why wouldn't you buy the toys? Then there would be no tax implication right?

There would be no tax implications if you used the toys 100% for your business. Otherwise, you'd apply your time-space% and some of the grant would be taxable.