Tax on prize or award

If you get any prize or award you must include it in the tax returns form. The price of the prize or award should be entered in to the form. But the price should be a fair one. But there are certain awards and prizes which do not fall into the taxable category. If the award is given as recognition for charitable, religious, educational, scientific, literary or artistic achievement it will be exempted from taxes. If you are selected for that award or prize without any action from your side then it will not be included in the taxable income. If you do not wish to receive the prize which is taxable then you can refuse it. Thus, if you refuse it then there is no need to include the amount in the taxable income list. One must report the prizes or awards received, if any in the tax returns form. If he/ she do not have the money to pay the tax for the award or gift at that time, he can ask for extension from the IRS. The tax return form should be furnished with all the necessary details regarding the taxable income and assets. Pay the tax as early as possible to avoid the possible chance of penalties due to late payment.