Game show prizes. Taxes and how much?

[tyler811]

I know that people on game shows have to pay taxes on the prizes they win like cars and trips.

Here are the questions.
1. All prizes how much tax do they pay and do they have to pay the taxes before they can take they can take the winnings home?
2. Are the taxes the same on money and other things like cars and trips?
3. I know if they win a cash prize they have have to claim on it their income tax as income earned but what cars and trips?

 

[FoBoT]

i am assuming this is a generic question/discussion, if you have a specific tax question, please use the stickied tax thread at the top of the forum

its income, you just have to report it as income when you file
so it depends on all your other stuff how much you pay
http://www.irs.gov/newsroom/article/0,,id=175963,00.html

...the IRS considers all income received in the form of money, property or services to be taxable income...

Prizes and awards

Subject to certain exceptions, the cash value of prizes or awards won in a drawing, quiz show program, beauty contest, or other event, must be included on the tax return as taxable income.

Taxpayers must also report the fair market value of merchandise or products won as a prize or award, as taxable income.

For example, both a $500 cash prize and the fair market value of a new range won in a baking contest must be reported as other income on Form 1040, Line 21.

http://www.irs.gov/pub/irs-pdf/p525.pdf

 

[tyler811]

i am assuming this is a generic question/discussion, if you have a specific tax question, please use the stickied tax thread at the top of the forum

its income, you just have to report it as income when you file
so it depends on all your other stuff how much you pay
http://www.irs.gov/newsroom/article/0,,id=175963,00.html

http://www.irs.gov/pub/irs-pdf/p525.pdf

Yay just a general question, been watching Whell of Fortune lately. And thanks Fobot that's cool you included all that.

 

[Red Squirrel]

That's BS, so they actually have to give some of the money they won? WTF is that shit? Wouldn't it be categorized as a gift? Or do you technically have to claim birthday and Christmas card money too? That's just messed. How would that work for physical items, do you actually have to give money based on the item's worth?

 

[Ns1]

That's BS, so they actually have to give some of the money they wont? WTF is that shit? Wouldn't it be categorized as a gift? Or do you technically have to claim birthday and Christmas card money too? That's just messed. How would that work for physical items, do you actually have to give money based on the item's worth?

A large number of prize recipients have to immediately sell their prize to pay for the tax consequences of receiving said prize

A large problem for THE PRICE IS RIGHT since you receive a tax form for MSRP of the item, even though you may only resell for a fraction of that.

 

[DaTT]

That's BS, so they actually have to give some of the money they wont? WTF is that shit? Wouldn't it be categorized as a gift? Or do you technically have to claim birthday and Christmas card money too? That's just messed. How would that work for physical items, do you actually have to give money based on the item's worth?

Yes, they would have to pay the tax on a won car....or anything. We have the "no-tax-on-winnings" perk up here in Canada

 

[Red Squirrel]

Wow, that's nuts, guess that's another perk of living up there. When we win something, we actually get to keep it.

 

[kranky]

There is a minor loophole, though. While the companies providing the prizes want the show to represent them for their full retail value (making the prizes sound as good as possible), taxes are only owed on the actual value. If you win a trip to Europe valued at $5,000, and you go home and find you can recreate the same trip on Expedia for $2,000, you can provide proof of that with your tax return and you'll only owe tax on $2,000.

 

[mmntech]

Yes, they would have to pay the tax on a won car....or anything. We have the "no-tax-on-winnings" perk up here in Canada

One of the few things the gov't doesn't tax up here. Keeps Canadians at the Canadian (provincial government owned) casinos.

 

[QueBert]

That's BS, so they actually have to give some of the money they won? WTF is that shit? Wouldn't it be categorized as a gift? Or do you technically have to claim birthday and Christmas card money too? That's just messed. How would that work for physical items, do you actually have to give money based on the item's worth?

Had a neighbor who won this crazy prize package with a nice ass boat and a camper and few other things. He sold it before he technically ever got his hands on it. If I remember what he said, he would have been taxed on it similar to his income, and he couldn't afford to pay 20% up front. He would have had to pony up like 20 thousands dollars to keep the shit. Sure it was worth like $100k worth of shit, but the money had to be paid by him in a lump sum if he wished to keep it all. Which is just crazy.

 

[Wreckem]

A large number of prize recipients have to immediately sell their prize to pay for the tax consequences of receiving said prize

A large problem for THE PRICE IS RIGHT since you receive a tax form for MSRP of the item, even though you may only resell for a fraction of that.

Just because they list the prize at MSRP, doesnt mean you cant argue/claim the fair market value. MSRP isnt necessarily the FMV, even for new products.

 

[Wreckem]

That's BS, so they actually have to give some of the money they won? WTF is that shit? Wouldn't it be categorized as a gift? Or do you technically have to claim birthday and Christmas card money too? That's just messed. How would that work for physical items, do you actually have to give money based on the item's worth?

For it to be a gift, there had to be intention to give it as a gift. Winning a prize cannot constitute a gift.

 

[Phynaz]

There is a minor loophole, though. While the companies providing the prizes want the show to represent them for their full retail value (making the prizes sound as good as possible), taxes are only owed on the actual value. If you win a trip to Europe valued at $5,000, and you go home and find you can recreate the same trip on Expedia for $2,000, you can provide proof of that with your tax return and you'll only owe tax on $2,000.

Good luck with that. When you win a trip a 1099 with the value of the trip is sent to you and the IRS. So you are going to try to convince the IRS that the entity that provided the prize was incorrect in it's value. You're going to do this how? Put in the value you think it should be worth and wait for the letter from the IRS the you under-reported your income? And then try to fight it?

Yes, I have won a multi-thousand dollar trip, and had to pay taxes on it.

 

[Lounatik]

Way back in '78, my mom and her sisters were on the nighttime edition of Family Feud and won 85.00. My mom was given a check for about 14.00 after her 17.50 share was taxed. She threw the check away.

Funny story: my aunt, the alleged smart one, answers this question " Name something a priest administers" to which she promptly answered "Bar Mitzvah" which is funny until you realize it was their third strike on triple bonus round with about 300 points on the board. And we are Catholic. My aunt, to this day, will not watch the reruns on GSN.


Peace


Lounatik

 

[wiredspider]

Good luck with that. When you win a trip a 1099 with the value of the trip is sent to you and the IRS. So you are going to try to convince the IRS that the entity that provided the prize was incorrect in it's value. You're going to do this how? Put in the value you think it should be worth and wait for the letter from the IRS the you under-reported your income? And then try to fight it?

Yes, I have won a multi-thousand dollar trip, and had to pay taxes on it.

Yep, you get a 1099 for the winnings. Technically you are able to claim only FMV of the winnings with proof, but it is bound to throw up red flags at the IRS. In my case, it was only a few hundred bucks difference, so I just used their value instead of getting audited down the line.... If I won some kind of huge prize that I wanted/had to use/keep, I would probably do FMV with a ton of documentation of it.

 

[alkemyst]

That's BS, so they actually have to give some of the money they won? WTF is that shit? Wouldn't it be categorized as a gift? Or do you technically have to claim birthday and Christmas card money too? That's just messed. How would that work for physical items, do you actually have to give money based on the item's worth?

ummm how is it a gift when work was required for the prize?

for tangible items, they have a 'value', you can assess a tax on a value.

btw tangible is physical in your post.

 

[EagleKeeper]

For one to use the FMV vs the MSRP in these situations; it is best to attach the proper documentation with a statement and file by paper.

 

[Red Squirrel]

For it to be a gift, there had to be intention to give it as a gift. Winning a prize cannot constitute a gift.

But there is intention of giving it as a gift.

"If you win, we will give you this". It's not "work this many hours and I'll buy you this". Just glad here when we win something it's actually us that gets it, not the government.