I live in Canada, and we don't have the IRS, so perhaps it's different for us. Either way, I was planning on putting the entire amount into my RRSP (Registered Retired Savings Plan) which means the government gives you back all the taxes back on it anyways, and if they really do see it as income and add it to my regular income, it means they give me a HUGE tax refund because it would increase my income to a much higher tax bracket