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.
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.
- The child had more than $2,200 of unearned income.
- The child is required to file a tax return.
- through 5. (blah blah, the child is a normal dependent)
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:
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.