NBC Photo: Trae PattonI love watching Deal or No Deal, but it drives me crazy when Howie says, "$100,000 is enough to change your life!" After taxes, won't the contestant only end up with half of that? Is Howie just out of the loop?
—Sarah, Cincinnati
Come, come. How can anyone who shares screen time with George W. Bush on national television be seen as out of the loop?
A Deal spokesman didn't return a call and an email asking for comment, but most game shows—such as The Price Is Right—do not pick up a contestant's tax tab. The winnings count as nonemployee income on a tax return.
So let's say you have Mary Q. Coffeecozy from Racine, Wisc., and she makes $40,000 a year. Then she wins $100,000 from The Banker. Here's how her life changes:
Her income is then $140,000 total, which puts much of her in a federal bracket of 28 percent (if she's single, which, come on, she is). She will owe roughly to $33,000 to Uncle Sam next April, with $107,000 left over to buy new scrapbooking supplies at Michael's.
Does that kind of shopping change one's life, as Howie Mandel might say? I don't know. Can scrapbooking revolutionize anything?
And if you win even bigger, you pay even bigger. If game-show winnings end up boosting a contestant's total income to more than $357,700 this year, that player—if single—will owe a whopping 35 percent of it in federal taxes. That, of course, doesn't include any additional dings provided by the state.
When game-show winners fail to pay those taxes, they go to prison. Take Richard Hatch, the very first winner of Survivor, who was found guilty in 2006 of failing to pay taxes on his $1 million jackpot. In his appeal, Hatch insisted that the show's producers had agreed to pay those taxes in some sort of stealthy quid pro quo deal. But the court didn't buy it, and Hatch remained slammerized. He is expected to be released from jail in October of 2009.
Let's just hope he can find a better accountant.
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