|One of the more common questions I've gotten about my experience of winning on Wheel of Fortune has to do with taxes. People want to know how much of the $50,150 I get to actually keep. To this point, I've just been able to share what I've known (which isn't much) and defer until I get my 2015 taxes done (since my winnings check didn't come until 2015, though my episode aired in 2014). Well, tax time has come and gone. Now I have a clearer picture of the whole Wheel/Tax thing.
First let it be said that I don't know much about this tax stuff. So if you're an IRS agent, please understand that I tried my best to get it right. I hired a well-respected tax guy and didn't try to cut any corners. I played by the book. But even you've gotta admit that that book isn't so easy to follow. So if there's an error, please understand that it is an honest one. Let's talk about it.
My big shiny number at the end of the show was $50,150—$41,200 in cash and a trip to Hawaii valued at $8,950. But the actual value of the trip was much lower than that. Looking at actual airfare, hotel costs, perks, spending cash, etc., the trip was $4,600. I don't fault Wheel at all for the overvaluation. Had I had to fly from the East Coast at a different time of the year, the numbers might have been much closer. So it was only because of the details of my situation that the valuation was off as much as it was. And to their credit, in the post win interview, they even pointed out that I only had to pay tax on the actual value of the trip, rather than the assessed value.
So that brings us down to $45,800 actually won. Then there are the expenses that it took to win that: hotel, flights, parking, meals, etc. You don't have to pay tax on that. All those deductions came to $800, so leaves the taxable amount at $45,000. That's my net.
Here's where I wish I could just say "and tax on $45,000 is $X" and we'd be done. But winnings are just a part of one's income. And with our progressive federal income tax, the percentage of tax you pay is based on how much you earned. So had I won this money in a year where I made a different amount of money, I might have had to pay a different amount of tax on it. Luckily for me, I'm what the government calls a "worthless lackabout", so my meager income puts me in the lower tax brackets.
So taking my tax bracket into consideration and the taxable net from the show, my tax guy figures I paid about $5,860 in federal income tax on the Wheel winnings*. And since the money was earned in California, there's gotta be California state income tax as well. That came to $1,788*. So where does that leave us?
Overall, this is much much better than I was expecting. I was thinking I would be walking about with more like $30,000 after taxes. And while a portion of that $37,102 was in the value of the trip to Hawaii (i.e. not cash), the post tax cash portion of the winnings is still nothing to sneeze at. Yep, while it is sad to say goodbye to the last bit of excitement associated with my Wheel experience, it is nice to have the tax question no longer hanging over my head. And as long as no auditors come knocking on my door, I'm a happy dude.
|Saturday April 23 2016||File under: wheel|
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