much taxes would i have to pay if i was to send a co-worker on the tv show What Not To Wear?

honeyb: much taxes would i have to pay if i was to send a co-worker on the tv show What Not To Wear?
Me and a friend from work want to enter another co-worker on the show what not to wear. She is in need for a serious makeover. I was reading the contract and it said that me and my friend would be responsible for the all the taxes. My question is how much is the taxes and is worth it?

Answers and Views:

Answer by ♣Chronickandy
If you like your coworker that much then it may be worth it to you and ur friend. Not sure of what the taxes may be. Im assuming the taxes on the clothes that they would purchase for ur friend.

Answer by Judy
It would depend on how much the payment was to you.

Answer by bjanugget
If they gave your friend $ 1000 worth of clothes, the tax bill would be your marginal rate (probably 15%). I don’t know why you would be taxed unless you received cash for being on the show or if your friend was unwilling to pay taxes on the “income.”

The tax would be directly tied to the marginal rate for you and your friend and the amount of compensation received. If you/your friend are worried about taxes, you can always decide not to accept the compensation. The only reason you would do this is if you either cannot afford the taxes or if you think the compensation is not worth the amount you would pay in taxes. If your coworker were to be selected, they would clearly explain the fair market value of the benefits received to each individual and the taxes due would be directly based on that.

Answer by ninasgramma
The person on the show receives extensive consultation and a $ 5,000 debit card, and perhaps more. If you are signing a contract that those items are really going to you, and that you are gifting it, and paying taxes on items you will never receive, then I think that is a really dumb idea and in fact I think it could be challenged.

However, if you are going to pay the tax on half of the amount, you need to find out the value of the items. The show might put a value on the time of the consultants. It could run into several hundred or a thousand dollars.

In my opinion, not worth it. I don’t see why you should pay anything unless you are receiving a cash award. In that case the cash is added to your other income and taxed on the same basis as wages.

Answer by bostonianinmo
Whatever value in goods and services that either of you receive is fully taxable as ordinary income to the person who actually receives the goods and services. Any cash you receive is fully taxable as well. You will receive a Form 1099-MISC from the show’s producers showing the value of the goods and services received. It’s added on to the rest of your income (Form 1040, line 21) in calculating your tax. Therefore the tax due will depend upon your other income.

If you receive a $ 10k makeover and are in a 25% tax bracket, you’d pay $ 2,500 in Federal income tax. If your state levies an income tax, you’d owe that as well. Most states with an income tax levy at between 3% and 10%, so tack on another $ 300 to $ 1,000 for state taxes.

One of the problems with these shows is that the values placed on the Form 1099-MISC are usually at retail, while the amount that the producers pay is substantially less. They often get the services for FREE in exchange for the publicity for the provider of the goods or services, yet they get a tax deduction for the amount that they report on the Form 1099-MISC. It’s all quite legal, and is one of the ways that these shows make money.