Dependent wins a trip. Comes 1099 with FMV $7000. TTB reference says everything not earned income is investment income. Am I reading this right? Surely the FMV of a prize is not investment income. Your comments please, and thank you!
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SW answers ?
My software say it is investment income. Be sure to have them price out the award. 1099's like this are typically inflated. If you can establish a lower FMV you can try paying the tax on the lower amount. -
Prize income
Could it be considered prize income and be put under Line 21 Other income? Doesn't seem like a prize should be subject to the Kiddie Tax or called investment income, IMHO.
OTOH, Form 8615 defines investment income as everything that is not earned income. No mention of prize income. That definition seems too broad.Comment
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My software specifically puts "prizes and awards" on Line 21. That is always how I have treated it. It is not investment income. Had the same circumstance last year - kid won a trip from a contest he entered = $11,000.Comment
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Kiddie Tax
VERY helpful comments. Thank you very much.Comment
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