I am really sorry, I keep beating my head against the wall trying to enter prize money in a way when they are not taxed. I've deleted absolute everything from her income (both income and tax due is $0). Then I entered her prize money income of $3,400 using the following method:
- Scroll all the way down to the Less Common Income category (it’s at the bottom)
- Select Start or Revisit beside Miscellaneous Income, 1099-A, 1099-C
- Scroll down and select Start or Revisit beside Other Reportable Income at the bottom of the section
- On the screen Other Taxable Income enter Prize Money as the description and the amount.
In the Other Taxable Income this is very simple, only two fields I get are Description and Amount. I enter $3,400 and immediately her Tax Due changes to -523. Why is that? This negative 523 amount is not 10% and since the income is under $10,275, why is there Tax Due at all.
Thanks again for your help and sorry if I am missing something very simple.
