NJEDA Emergency Assistance Grant

[rmalone1216]

I am a Partner LLC and received a $10,000 Covid relief grant from the state of NJ (NJEDA Emergency Assistance Grant).  It is not taxable by the state of NJ but I have been told it may be taxable at a federal level.  I did not get a 1099G or any other 1099 from the state.  How do I find out if it is taxable?  If it is taxable I know I should enter it under "Other Income" but how do I back it out of the state return in TurboTax since is definitely not taxable by the state of NJ?

[PatriciaV]

Yes, the NJEDA Grant is taxable income. Per the IRS CARES Act Coronavirus Relief Fund FAQs:

Q. If governments use Fund payments as described in the Fund Guidance to establish a grant program to support businesses, would those funds be considered gross income taxable to a business receiving the grant under the Internal Revenue Code (Code)?

A. Yes. The receipt of a government grant by a business generally is not excluded from the business's gross income under the Code and therefore is taxable.

You are correct that you would report this grant income in TurboTax under Other Income. As you work through your New Jersey State return, you will be asked to allocate your federal income to New Jersey. In that section, you will be able to eliminate the grant income from the income reported to your state.

[rmalone1216]

After completing my Federal Taxes I downloaded my NJ State Return.  I need to remove the $10,000 NJEDA grant from the "Other income" since it is not taxable on the state return.  I was not given any opportunity to allocate or adjust the income, TurboTax automatically transferred the full income.  I can not figure out how to make the adjustment in the State return.  Any ideas?

[PatriciaV]

You may enter an income adjustment under Other Deductions or Other Credits during the State interview for your New Jersey return. Be sure to enter a complete description of the income you are adjusting.

[TAXRETURNSFILER]

Thank you for  your answer about where to deduct a 10,000 NJEDA grant. However, I see no general "other deductions/credits" question in Turbotax step by step. I also see no line for such a deduction on the NJ-1040. Can you possibly provide me with the line number on the NJ-1040 where I could enter such $10,000 deduction? Thanks again so much.