Tax and Grants

[Mercudenton]

I recently received a grant from an educational charity to help develop some new content in an existing class. They paid it direct to me rather than via the institution.

My tax advisor says I am therefore an independent contractor of the granting agency and need to pay self-employment tax on it.

I don't quite see how this fits with the IRS definition of self-employment, however, since I rendered no services to the granter nor did they ask for any. This seems to make it closer to a gift defined by the IRS at that "in which the giver doesn't expect an equal amount of consideration in return"

It seems to fit better with this IRS definition of a non-taxable grant "if  the grant's purpose is to achieve a specific objective - ie produce a report or product, or to improve or enhance a literary, artistic, musical, scientific, teaching, or similar capacity, skill or talent of the grantee." But I'm unsure if this applies either since it seems to be about the tax liability of the gift giver not the receiver.

Anyone have any experience of this?

[Puget]

This is why you really want all grants to go through your university not directly to you, but that ship has sailed unfortunately.
I'm no expert, but for consulting work I've done (being a consultant on grants, giving continuing ed webinars), the university/company has issued me a 1099 MISC form, and I then report it as miscellaneous income on my taxes.

[polly_mer]

I agree with Puget on all counts. 1099 MISC may be your best bet at this moment.

[Mercudenton]

Thanks.