I attended my first ever Hackathon and won a cash prize.
I plan to donate the money.
I can receive the prize money in my own name, then donate it to a tax-exempt charity and get an income tax deduction.
My question: If I do that, will I end up out-of-pocket due to self-employment taxes?
Is the correct answer:
Self-employment taxes do not apply to Hackathon prize money, even though personal income tax does. Therefore, the charitable tax deduction (balancing out the taxable income) should make this a net-zero transaction for me.
Self-employment taxes do apply to Hackathon prize money, but only after deducting the charitable gift, making this a net-zero transaction for me.
Self-employment taxes do apply to Hackathon prize money, and I'll still end up paying them despite giving all the money away and getting a full income tax deduction for the charitable gift.
I suspect #2, but haven't found a definite answer despite some searching.