Probably not. Did the audience members get to keep the rest of the cash if they had to sell the car to pay the taxes?
FWIW, Oprah covered the taxes when did a similar giveaway again last year. So I guess she (or her people) took those complaints to heart.
Yeah, that whole brouhaha with Oprah giving away the cars was simply because her studio audiences are, well, stupid. Not the kind that if they won $5000 in the lottery the first thing they’d do was put aside some for the extra income tax at the end of the year.
Remember that the prizes on all game shows are essentially in-show commercials. Once Johnny Olsen does the voice over for them the show has fulfilled its obligation whether anybody wins them or not. Though its got to be cheaper for them to giveaway the prizes they get for free (advertising) rather than pony up a cash equivalent. So I would imagine they encourage taking the (taxable to you) prizes more than the cash.
Ok, so if Oprah pays the taxes on the cars, wouldn’t that increase the income of the recipient even more? Oprah would have to cover the taxes on the taxes for guests to get off without paying anything additional.
Yes, but it is a percentage so it reaches a point where you can give someone enough money that after taxes what is left is the originally intended amount (though it is trickier to do it exactly with lots of people since not everybody will actually pay the same tax).
Say 10% tax on $5000. $500 would go to tax. So give $5500. $550 would go to tax. So give $5550. $555 would go to tax. So give $5555, $555.50 would go to tax. So give $5555.50. $555.55 would go to tax. So give $5555.55. $555.56 (rounding up would go to tax). So give $5555.56. $555.56 (with rounding would go to tax. Leaving them with the originally intended $5,000.
But even if that isn’t covered, everybody left that the show with more than they entered. Complaining about the taxes or hassle of dealing with the taxes (or the hassle of having to register the car and pay those fees), is a dick move. IMO.
They make it exceedingly clear before you even go on that all winnings are taxed. I mean, duh.
I don’t believe that’s the case - however, they more or less all do that, because it’s incredibly annoying to actually deal with the prizes. Much easier to just to give cash, and winners equally find it a lot easier to deal with. However, they can and are prepared to give you your prize.
Of course, the prizes are mostly from sponsorships. Chrysler gives them the car to give away and writes it off as advertising. From their perspective, the retail cash value costs them more than the car itself.
Yeah, I’d always imagined that if I was on Price is Right, or some other show that had to potential to win several prizes rather than one large one or simply cash, I’d get the cash option anyway.
I mean…how many of the people on TPIR can actually use a whole new dining room set, with new china, and a “rocki’n jukebox to play all your favorite hits!”?
Not only that, one of the less exciting aspects of the game show experience is the green room info session. There is typically a talk about your behavior on the game (do’s and don’t’s like if it’s okay to touch the host - you can’t touch Vanna, but Pat is fine), game show confidentiality stuff (you can’t tell people what happened until the air date - yeah, right), and an accountant/lawyer type tells you about taxes, 1099MISC forms, and the like. It’s painful to sit through because you’re all charged up to be on the show, but they tell you quite explicitly that taxes are your responsibility and you need to know not just the federal reporting rules, but those for your state.
And I’d like to deliver a hearty middle finger to the Oprah car winners that whinged about having to pay taxes. YOU GOT A NEW CAR. If you didn’t want it, or couldn’t pay the taxes, I’m sure you could sell it at any price and still come out on top. I mean, I’m as appalled by the Cult of Oprah as anyone, but this was just bitching by a bunch of mental midgets. You can’t do anything nice for some people. And I can’t imagine some Harpo lawyer/accountant mentioned the thing about taxes before they handed them the keys.
This is false. Or at least a bit off. I’m out of town, so don’t have my annotated tax code close at hand and can’t give you the exact code provision right now, but I do remember this from my tax class.
When an employer (or whoever is giving you income) offers to pay your income tax, that extra payment is also taxed. However, when an employer offers to pay the tax on that new income, that new payment is not taxed.
In other words, the IRS only applies one level of recursion. In the example above, on a $5000 payment with 10% tax, the employer (or “giver”) could pay $550 and cover all the tax. Yeah, in the given example, this doesn’t seem like that big a distinction, but this comes up a lot more often in the context of an executive who is making $5 million per year, and the company offers to pay their income tax. In that case, the difference can be hundreds of thousands of dollars.
This doesn’t seem quite right. Can you cite this? I’d love to be wrong since I calculate the tax gross up for my company in situations you describe and it could lower our expense. I think you’re wrong though. How would the difference between the new income and the original be differentiated on W-2 reporting? I think the entire amount of the gross up is considered regular income and the recursion is as obfusciatrist describes.
Except in situations where the new income pushes you over certain caps that affect all your previous deductions. It’s not the higher tax bracket, but if it pushes you over the AGI cap for certain itemized deductions that could be kinda crappy.
Sure. When I’m back at home and have my code, regs, and cases at hand, I’ll look it up and post a cite.
That’ll be a week from tomorrow. PM me if I forget to post here.
Disclaimer - this is federal only. I have no idea how your state handles this.
I think I actually remember Thom Singer from Pyramid. And I remember him as kind of a dick.
[Sheldon Leonard]
You haven’t given me a gift, you’ve given me an obligation… Ah, it’s no wonder suicide rates skyrocket this time of year.
[/Sheldon Leonard]
Sheldon Cooper, I think…
I sort of thought the tax issue for game show wins was well-known. Sometimes they will give a car, plus some $ that would probably cover the taxes, but that is rare.
In the same vein when you win big in Las Vegas on, for instance, a Wheel Of Fortune slot machine, the fine print will tell you it is paid out over many years, and the lump sum for an instant payout (if offered) can be way less than those millions you thought you just won. There are some large payout machines that do not have the multi year payouts, but you should always read the fine print on any slot, just in case that matters when you win.
And yes you most certainly will pay taxes on winnings in Las Vegas. US citizens should bring their Social Security card (you will be taxed at the end of the year), non-US citizens will see something like 30% of their winnings sucked out of their hands immediately.
Nevada residents have it somewhat easier - we can deduct yearly winnings equal to yearly losses with fewer eyebrows raised at the IRS. They figure we live here, play more often and lose more often. But if you are from Iowa, chances are good you will pay full taxes on any big win.
Got help elsewhere and was directed to this cite for “tax gross ups” where the giver of a prize is paying the tax on the prize:
So, 25% is the base tax rate on the winnings. And if the prize giver grosses up to cover tax
33.33% is a fully iterated number based on 25% (25% + 6.25% + 1.56% + 0.39% + 0.09% + 0.02%…). If it stopped after just the first iteration it would end up being 31.25%.
When I got my first job, and AT&T paid my moving expenses, they grossed up the payment (which was taxable) and gave me a sheet of paper saying exactly what I should put in each box of my tax return. This was well before TurboTax, and I’m sure glad they did.
I won a week at a resort on Jeopardy, and definitely false.
My problem was that the prize was the hotel, $100 a day for meals, and transportation. But I lived 70 miles away from the resort, and the trip to and from the airport would have been longer than the drive. They couldn’t remove the transportation value from the prize, and they couldn’t give it to me in cash, so I paid taxes on something I never used. I’m not complaining, since the vacation was definitely worth it.
I don’t remember if I paid taxes on the parting gifts, which were all well under $50, but they were trivial.
Oh, for the love of Sheldon Leonard. :smack:
Yes, Sheldon Cooper.