https://ashleystrahm.medium.com/the-price-aint-right-8c3d3ca5253b
Ashley Strahm won $500 in cash, four kitchen appliances, a jet ski, and trips to New Hampshire, Ocho Rios, Jamaica and Sydney, Australia on the CBS game show -- a prize package worth $40,000. But to actually claim her prizes, she had to fork over $4,000 in advance for taxes.
This is nothing new. I heard this back in the '50's. (I'm old! đ˛) People have to SELL some of their loot in order to pay the "gift tax" or whatever other taxes apply. đ
Its called a prize tax, and its on anything you win and has been for decades. I guess i think 4k for 40k worth of stuff seems reasonable to me.
Itâs not really a PRIZE TAX. Your winnings are taxed on a 1040-MISC as regular earned income and Federal Tax is deducted at the same rate as your wages.
You do have to pay 8.75% California State Tax up front before theyâll even ship your prizes. In the above case, they wouldâve kept the $500 and billed her the rest.
My wife won a $22k Honda Civic and all said and done we paid 31% of the value in Federal & State taxes. We are still driving it five years later, and love telling the story! They gave us the âI won this car on the Price is Rightâ license plate holder, which is truly priceless, as are the memories.
I know it's not actually called the prize tax, but that's what it is in essence. It shouldn't be taxed as an earning in my opinion, it should be taxed at the sales tax rate. Why should the government benefit over a prize being given, when it wouldn't get that much if it were just a traditional sale? It's awesome that you won a car, even better that it's a Honda. I know a guy that was on wheel of fortune and won 30k or so. He was in the PIR audience one too, but didn't get called up.
shareI agree that it shouldn't be taxed! But CBS writes it off as a Business Expense, so the prize taxes are a way to cancel that out! (Or if the prize is a corporate donation, that company is going to write it off).
I have heard that Canada and many foreign countries do not tax winnings.
Canada's taxes are bad enough in general.
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