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I am a minor (16 years old) and I won $5000 from a research competition. My teacher informed me I have to pay taxes on this - is there some way to calculate how much I'd have to pay? I live in the USA.

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    What country? Tax related questions require a country tag. May 22, 2021 at 2:09
  • USA. I edited the question May 22, 2021 at 2:09
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    If it is the only income you get this year, the tax is zero. There is a minimum income before taxes kick in, somewhere above 12k.
    – Aganju
    May 22, 2021 at 2:55
  • It's the only income I got this year but if i recall correctly, it is not earned income - it is unearned income so I think different rules may apply. May 22, 2021 at 2:56

2 Answers 2

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According to the Interactive Tax Assistant, you will have to file a return:

Do I need to file a tax return?

You are required to file a tax return for 2020. Your return's gross income is equal to, or exceeds, $1,100. File your return [via paper mail, or] electronically using one of the following four options:

  • Use IRS Free File (for certain low-income taxpayers) or Fillable Forms
  • Use a Free Tax Return Preparation Site
  • Use Commercial Software
  • Find an Authorized e-File Provider

IRS is not saying you must e-file. You can always file by paper mail: download the 1040 and other relevant forms, fill them out in ink or inside your PDF viewer, print and mail.

Your parents also have to file Form 8615, because:

Form 8615 must be filed for any child who meets all of the following conditions.

  1. The child had more than $2,200 of unearned income.
  2. The child is required to file a tax return.
  3. through 5. (blah blah, the child is a normal dependent)
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  • This addresses filing requirement, but doesn't answer the question of how much tax. Yes when you file you'll learn how much you owe, but it doesn't need to be a mystery up until that point.
    – Hart CO
    May 22, 2021 at 4:32
  • @HartCO Without knowing the parent's top rate there's no way to compute the taxes. May 22, 2021 at 5:07
  • @LorenPechtel Yes, they will have to disclose that to OP. I've not dealt with tax returns for dependents in a long time, but based on what I recall it looks like for 2020 OP would pay parent's top marginal rate * $2,800 + $110, those figures might be different for 2021 but that's a good starting point.
    – Hart CO
    May 22, 2021 at 14:33
  • The part you quoted makes it sound like you have to file electronically. That is not true. IRS wrote that language at a time when most people filed on paper and so knew that, IRS is trying to promote e-filing by making people aware of those alternatives. Edit submitted. May 22, 2021 at 21:35
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As it doesn't seem like the award fits with IRS Topic No. 421 Scholarships, Fellowship Grants, and Other Grants),

Your research award will most likely be reported on a 1099-MISC. The tax paperwork like W-2 will be sent to you in late January/early February in the next tax year.

The big issue is that if you are being claimed as a dependent by your parents/guardians:

From: IRS Tax Topics 551 - Dependents

Dependents – If you can be claimed as a dependent by another taxpayer, your standard deduction for 2020 is limited to the greater of: (1) $1,100, or (2) your earned income plus $350 (but the total can't be more than the basic standard deduction for your filing status).

Note the above stated earned income which usually comes on a W-2 (part-time or summer job). So you won't be able to use the 'basic standard deduction' for a single taxpayer ($12,400 in 2020) if being claimed as a dependent.

As you are under 18 and made more than $2,200, Form 8615 - Tax for Certain Children Who Have Unearned Income applies so how much your parents/guardians earn affects how much tax you pay.

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  • Unearned income above 2,200 will be taxed at the parents top rate..
    – Hart CO
    May 22, 2021 at 4:29
  • @HartCO Thanks. Missed that. May 22, 2021 at 4:56

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