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Reply to "Teenage daughter won an academic award with a cash prize -- How to handle for tax purposes?"
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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Did they send you a 1099? If so, file a simple 1040 EZ form for her. The standard deduction will more than wipe out any liability. If not, don't worry about it. [/quote] Yes, I forgot that important part of business in the original post. So I should fill out a separate tax return for her specifically? Thanks![/quote] I would. However, she should not claim herself as a dependent since presumably you will claim her on your own tax returns. She doesn't need the personal exemption -- she does. It goes on Line 21. IRS Publication 17: "Prizes. Scholarship prizes won in a contest are not scholarships or fellowships if you do not have to use the prizes for educational purposes. You must include these amounts in your income on Form 1040, line 21, whether or not you use the amounts for educational purposes." https://www.irs.gov/publications/p17/ch12.html [/quote]
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