Author Topic: Game Shows and Taxes (Read 9660 times)

Jeremy Nelson · « **on:** October 28, 2008, 11:39:09 AM »

I've always wondered, and I was hoping somebody here would know:

Why is it that contestants have to pay taxes on winnings from a game show?

Aren't we one of the only countries to tax GS winnings?

The fact that the governement taxes stuff like this makes me believe that we've turned into the country we abandoned.

TLEberle · « **Reply #1 on:** October 28, 2008, 12:16:03 PM »

[quote name=\'rollercoaster87\' post=\'200583\' date=\'Oct 28 2008, 08:39 AM\']Why is it that contestants have to pay taxes on winnings from a game show? [/quote]Because it's earned income. Just like any other income you bring in.

Quote

The fact that the government taxes stuff like this makes me believe that we've turned into the country we abandoned.

I don't see how the two are connected really. As long as there's an income tax, there's gonna be taxes on game show winnings.

Matt Ottinger · « **Reply #2 on:** October 28, 2008, 12:28:06 PM »

[quote name=\'TLEberle\' post=\'200585\' date=\'Oct 28 2008, 11:16 AM\']I don't see how the two are connected really. As long as there's an income tax, there's gonna be taxes on game show winnings.[/quote]
Strictly speaking, that's not true. There are all sort of exceptions about income that isn't taxed, and if the federal government wanted to make game show winnings non-taxable, then they certainly have that power. Game show winnings are not taxed in Canada, for example. It's one of Steve Beverly's soapbox speeches, but I think intuitively, most of us recognize that there's nothing inherently special about game show income that requires it be treated any differently than regular income.

jybt · « **Reply #3 on:** October 28, 2008, 01:42:17 PM »

What I see is that taxing winnings on game shows before you even receive them, then again when 4/15 rolls around, is false advertising.

If Jessica Robinson was taxed $400,000 from her winnings before she even got them, then NBC should not be allowed to call her a $1,000,000 winner because she didn't win $1,000,000!

It's called Million Dollar Mission, not Six Hundred Thousand Dollar Mission.

Matt Ottinger · « **Reply #4 on:** October 28, 2008, 02:40:23 PM »

[quote name=\'jybt\' post=\'200590\' date=\'Oct 28 2008, 12:42 PM\']
What I see is that taxing winnings on game shows before you even receive them, then again when 4/15 rolls around, is false advertising.[/quote]
By that logic, every employer in America is lying about an employee's salary.

And by the way, the money is only taxed once. By 4/15 you file your returns, and you might even get part of the withheld money back. But you're only paying taxes on the income a single time.

Having said that, I'll grant that I have my own issues with an announced top prize and then a little tiny disclaimer saying all or part of it is an annuity. On the older big-money shows (Chance of a Lifetime or even $100,000 Name That Tune) they made a point about telling us how the money was paid out.

Joe Mello · « **Reply #5 on:** October 28, 2008, 02:49:56 PM »

[quote name=\'Matt Ottinger\' post=\'200595\' date=\'Oct 28 2008, 02:40 PM\']On the older big-money shows (Chance of a Lifetime or even $100,000 Name That Tune) they made a point about telling us how the money was paid out.[/quote]
Wheel of Fortune used to be good about that, too. Guess not so much now. As long as they're clear during the audition process, it shouldn't be too much of an issue.

The prospect of an annuity probably wouldn't deter me, though. I like the idea of having a second job without having a second job.

CeleTheRef · « **Reply #6 on:** October 28, 2008, 02:56:11 PM »

here in Italy it's much simpler: the network keeps 20% of the cash prize to pay off taxes then deliver the rest in gold coins, because anti-gambling laws prohibits real cash prizes. Technically the network is "selling" you the gold for free, and it doesn't affect your income. Item prizes are not taxed.

tvmitch · « **Reply #7 on:** October 28, 2008, 03:07:38 PM »

[quote name=\'CeleTheRef\' post=\'200599\' date=\'Oct 28 2008, 02:56 PM\']
here in Italy it's much simpler: the network keeps 20% of the cash prize to pay off taxes then deliver the rest in gold coins, because anti-gambling laws prohibits real cash prizes. Technically the network is "selling" you the gold for free, and it doesn't affect your income. Item prizes are not taxed.
[/quote]
That is actually a fairly awesome payout structure. I know someone who approves.

Matt Ottinger · « **Reply #8 on:** October 28, 2008, 03:11:18 PM »

[quote name=\'Joe Mello\' post=\'200598\' date=\'Oct 28 2008, 01:49 PM\']
As long as they're clear during the audition process, it shouldn't be too much of an issue.[/quote]
Oh yeah, I don't mean to imply anything truly deceitful is going on. It goes to jypt's larger point, though. Most everybody knows (or assumes) that a player's winnings are taxed, so that's really not as big a deal. As I said before, you know your salary, but you also know you don't actually see that sum show up in your paycheck. But an annuity is something that I would guess the average audience member is not thinking about when they hear "million dollar winner". In that sense, it's at least a little deceitful. Possibly even more so than lottery winnings, where I believe the average person DOES understand the annuity vs cash option.

Mike Tennant · « **Reply #9 on:** October 28, 2008, 03:12:10 PM »

[quote name=\'CeleTheRef\' post=\'200599\' date=\'Oct 28 2008, 02:56 PM\']here in Italy it's much simpler: the network keeps 20% of the cash prize to pay off taxes then deliver the rest in gold coins, because anti-gambling laws prohibits real cash prizes. Technically the network is "selling" you the gold for free, and it doesn't affect your income. Item prizes are not taxed.[/quote]That definitely beats our system, where you get paid in fiat currency that is continually depreciating, and ever more rapidly so as more "money" is invented to bail out more and more politically connected corporations. That annuity you're getting from WOF may not be worth anything by the time you get the last payment of it--think of buying a loaf of bread in Zimbabwe today--but the gold you get from an Italian game show will always be valuable.

ChrisLambert! · « **Reply #10 on:** October 28, 2008, 03:23:02 PM »

[quote name=\'Matt Ottinger\' post=\'200595\' date=\'Oct 28 2008, 02:40 PM\']
Having said that, I'll grant that I have my own issues with an announced top prize and then a little tiny disclaimer saying all or part of it is an annuity. On the older big-money shows (Chance of a Lifetime or even $100,000 Name That Tune) they made a point about telling us how the money was paid out.
[/quote]

$million Chance wasn't truly forthcoming with that fact, were they? I only knew because of the story in TV Game $how Magazine.

/really curious as to whether the winners' annuities were bought out

Matt Ottinger · « **Reply #11 on:** October 28, 2008, 03:37:31 PM »

[quote name=\'ChrisLambert!\' post=\'200605\' date=\'Oct 28 2008, 02:23 PM\']$million Chance wasn't truly forthcoming with that fact, were they? I only knew because of the story in TV Game $how Magazine. [/quote]
For some reason, I seem to remember Jim Lange saying it on air. But golly, we're talking about a twenty-year-old memory, I could easily be mistaken.

[quote name=\'ChrisLambert!\' post=\'200605\' date=\'Oct 28 2008, 02:23 PM\']/really curious as to whether the winners' annuities were bought out[/quote]
For the longest time, I actually went a step further and wondered if the production company might have had the annuities in a holding company that they just bankrupted once the show was canceled. However, there have been some modern interviews with winners (here's one now) which, while they don't explicitly say they're still getting their checks, certainly seem to indicate that's the case.

clemon79 · « **Reply #12 on:** October 28, 2008, 03:52:30 PM »

[quote name=\'jybt\' post=\'200590\' date=\'Oct 28 2008, 10:42 AM\']
What I see is that taxing winnings on game shows before you even receive them, then again when 4/15 rolls around, is false advertising.[/quote]
Still haven't gotten past that whole semantics thing, have you?
[quote name=\'mitchgroff\' post=\'200600\' date=\'Oct 28 2008, 12:07 PM\']
That is actually a fairly awesome payout structure. I know someone who approves.[/quote]
Also approves
[quote name=\'Matt Ottinger\' post=\'200606\' date=\'Oct 28 2008, 12:37 PM\']
For some reason, I seem to remember Jim Lange saying it on air. But golly, we're talking about a twenty-year-old memory, I could easily be mistaken.[/quote]
I'll back you on that. I remember that too.

Brig Bother · « **Reply #13 on:** October 28, 2008, 04:49:47 PM »

[quote name=\'CeleTheRef\' post=\'200599\' date=\'Oct 28 2008, 06:56 PM\']
here in Italy it's much simpler: the network keeps 20% of the cash prize to pay off taxes then deliver the rest in gold coins, because anti-gambling laws prohibits real cash prizes. Technically the network is "selling" you the gold for free, and it doesn't affect your income. Item prizes are not taxed.
[/quote]

That is quite good. But it's not as good as in the UK where, if, for example, you win a million pounds you actually get to keep a million pounds. In fact there are no taxes on gaming winnings in the UK these days, unless gambling is your main source of income. Probably because it's not generally speaking a guaranteed source of income. Unless you're the book-keeper, obviously.

If you want to tax cash winnings that's your look out, but I find the idea of levying taxes on item prizes absolutely abhorrent. If taking the prize is going to make you substantially financially worse off then what's the point?

TLEberle · « **Reply #14 on:** October 28, 2008, 09:53:35 PM »

[quote name=\'Matt Ottinger\' post=\'200587\' date=\'Oct 28 2008, 09:28 AM\']Strictly speaking, that's not true. There are all sort of exceptions about income that isn't taxed, and if the federal government wanted to make game show winnings non-taxable, then they certainly have that power. [/quote]For sure, but I contend that most people knew what I meant.

As opposed to...say...this guy:

[quote name=\'jybt\' post=\'200590\' date=\'Oct 28 2008, 10:42 AM\']What I see is that taxing winnings on game shows before you even receive them, then again when 4/15 rolls around, is false advertising[/quote]Sorry, you fail. The advertised prize is in fact $1 million, and that is the prize awarded. It is only after taxes are assessed that the prize amount dwindles. Now, if we were to go to a consumption instead of income tax, this wouldn't be an issue, but you missed the boat, again.