Winning money on a game show can be an incredibly exciting experience. However, before you start making plans for how to spend your prize money, it’s important to understand how much of your winnings you will actually get to keep. Game show winnings are considered taxable income by the IRS, which means they are subject to both federal and state income taxes. Keep reading to learn more about how game show prizes are taxed.
Are game show winnings taxed?
Yes, prize money won on game shows is considered taxable income by the IRS. This is true whether you win cash, cars, vacations, or any other type of prize valued over $600. If your total game show winnings for the year exceed $600, the show’s producers should provide you with a Form 1099-MISC reporting the amount you won. You must then claim your winnings as income when you file your federal tax return.
Why are game show winnings taxed?
The IRS considers any prize money you win to be a form of income. Therefore, just like the income you earn from your job or investments, winnings from game shows, sweepstakes, or contests are viewed as taxable income. This applies to both cash prizes as well as any non-cash prizes you receive, such as cars or vacations. These non-cash “prizes” are assigned a monetary value and you are responsible for paying taxes on that amount.
What tax form do I use to report game show winnings?
If you win more than $600 total in prizes on a game show, you should receive a Form 1099-MISC from the show’s producers shortly after the end of the year when you won the prize. This form will state the total amount of your winnings. You will then report this amount on your federal tax return. Specifically, you will report it as “Other Income” on Form 1040.
Any state taxes you owe on the prizes will also be reported on your state tax return for the year. Check with your state’s tax agency to determine the appropriate form.
How much tax will I owe on game show winnings?
The amount of tax you’ll owe on game show prizes depends on several factors:
- Your total amount of winnings for the year
- Your federal tax bracket
- Whether state taxes apply to your winnings
- Whether local taxes apply to your winnings
At the federal level, game show winnings are taxed as ordinary income based on your tax bracket. Currently, federal income tax rates range from 10% to 37%. Some examples of how much you might owe:
| Total Game Show Winnings | Federal Tax Range (Assuming Single Filer) |
|---|---|
| $1,000 | $100 – $370 |
| $10,000 | $1,000 – $3,700 |
| $100,000 | $10,000 – $37,000 |
State taxes can range from 0% to over 13% depending on where you live. Some cities or counties may also impose local taxes on prizes. Overall, you can expect to lose around 30-40% of your game show winnings to federal and state taxes combined.
Are there any special taxes on game show winnings?
There are a few special tax considerations to keep in mind for certain game show prizes:
- Cars or other vehicles: In addition to income tax, you may owe a luxury or gas guzzler tax if the car is worth over a certain amount.
- Vacations or trips: These may be subject to gift taxes.
- Investment prizes: Capital gains taxes may apply if you later cash out stocks, bonds, or other investments won as a prize.
Check with a tax professional to determine if any special taxes apply to prizes you win.
Are there any tax deductions I can take?
Unfortunately, you generally cannot claim any deductions related to your game show winnings. That’s because you did not incur any expenses or losses related to receiving the prize. However, if you win frequent small prizes, you may be able to claim gambling losses related to those winnings if you regularly claim income from gambling.
Do I have to pay estimated taxes on game show winnings?
If your total game show winnings exceed $5,000 for the year, you may need to make estimated tax payments on your winnings. Estimated payments are required when you owe more than $1,000 in taxes for the year above what’s withheld from a W-2 job. Since game show prizes aren’t subject to withholding, you may need to make quarterly estimated payments to avoid an underpayment penalty.
Can I reduce taxes on my game show winnings?
There are a few ways you may be able to reduce taxes on game show prizes:
- Offset the income with deductible expenses elsewhere on your return, such as charitable contributions or business expenses.
- Claim prizes on behalf of a child or other family member in a lower tax bracket.
- Donate a portion of prizes to charity and claim a deduction.
However, overall the IRS does not allow many deductions directly related to prize winnings or ways to shelter this income.
Are game show winners subject to gift tax?
In most cases, you will not owe federal gift tax on prizes won on game shows. The gift tax generally applies when you transfer assets to another person without receiving something of equal value in return. For example, if you won a car on a game show and then transferred the title to your sister as a gift, federal gift taxes would not apply because you did not pay anything for the car initially.
However, in some cases where you decline a prize and request it to be awarded to another person, this may be viewed as a taxable gift. For example, if you win $20,000 in cash on a game show and ask for your friend to receive the money instead, you could be responsible for paying federal gift tax.
Do I have to pay FICA taxes on game show winnings?
No, you do not have to pay Social Security or Medicare taxes on income earned from prizes or gambling winnings. The self-employment tax (SECA) which is normally 15.3% on income also does not apply. These taxes only apply to income earned from working, not from contests, lottery winnings or other types of gambling income.
Are game show winnings subject to state income tax?
In most states, game show winnings are subject to state income taxes. Currently, there are only seven states that do not tax individual income – Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. If you live in one of those states, you may not owe any state taxes on your prizes.
In other states, tax rates range from around 3% to over 13%. Some states follow federal tax brackets while others have their own brackets and rates. Non-cash prizes are usually taxed at their fair market value. Check with your state’s tax agency to determine the rate that applies to your winnings.
How do taxes on game shows compare to sweepstakes or lottery winnings?
The same general tax rules apply to cash and prizes won from sweepstakes or lotteries. However, there are a few differences to note:
- Lottery withholdings: Most state lotteries withhold federal and state taxes before paying out prizes over $5,000. This helps cover your tax liability.
- Gambling losses: If you regularly buy lottery tickets or gamble, you may be able to deduct some gambling losses to offset lottery and gambling winnings.
- State taxes: Some states, like California, exempt state taxes on lottery winnings but not on general game show prizes.
The bottom line is that all gambling winnings, whether from game shows, playing the slots, betting on horse races or winning the lottery jackpot are viewed as taxable income by the IRS and most states.
Are small game show prizes taxed?
Yes, even small game show prizes under $600 are technically taxable. However, for small amounts, the show producers will likely not report your winnings to the IRS or send you a 1099 form. Even without getting a 1099, you are still legally required to report all winnings as income on your tax return.
In practice, the IRS does not expect most taxpayers to report very small prizes of just a few hundred dollars or less. But once your total winnings for the year exceed $600, it’s important to make sure you claim everything, even the small prizes. Otherwise, you could be flagged for underreporting your income if the game show reports your winnings to the IRS but you do not.
Do I owe taxes in the state where I won a game show prize?
If you win a prize on a game show in a state other than your state of residence, you may owe state taxes in the state where you won in addition to your home state. About half of U.S. states impose a tax on income earned by nonresidents from sources within the state.
For example, say you are a resident of Florida but won a $10,000 cash prize on a game show taped in California. You would not owe any taxes on the prize money to Florida since they have no income tax. However, California would tax your prize winnings as income earned within the state by a nonresident. The rate is around 8% so you would owe around $800 in California state taxes.
Do I have to pay local taxes on game show winnings?
A few cities and counties impose local income taxes that may apply to prizes won on game shows, even if you do not reside in that locality. For example, if you win a prize on a show taped in New York City, you may owe the New York local tax of around 4% in addition to state and federal taxes.
Kansas City, St. Louis, and several cities in Ohio, Pennsylvania, Maryland, and Michigan also impose local taxes that could apply to game show winnings. Be sure to check for any local prize taxes that may apply.
Can non-US citizens claim taxes on game show prizes?
Foreign nationals who are not U.S. citizens or resident aliens may also be required to pay U.S. taxes on prizes won while participating on game shows in the United States. Any prize money or value from a U.S. source is potentially subject to 30% tax withholding.
Winnings are reported on 1042-S forms rather than 1099 forms. Tax treaty provisions may allow contestants from certain countries to exempt all or some of their winnings from U.S. taxes. A non-resident should consult a U.S. tax professional to determine their specific tax obligations.
Are there any exceptions to paying taxes on game show prizes?
There are a few scenarios where game show contestants may not have to pay taxes on some or all of their winnings:
- Gifts: If winnings are declared as a gift to the contestant, they may not be taxable. But the contest rules must make clear the prize is a gift.
- Charity episodes: Winnings donated directly to a 501(c)3 non-profit may be tax exempt.
- Tuition prizes: If winnings go directly to pay a school for tuition, they may not be taxed.
- Non-winners: Contestants who don’t win any prizes generally don’t report anything or owe taxes.
The rules are complex so consult a tax expert if you believe all or part of your winnings may be non-taxable.
Conclusion
Winning prizes on game shows can be thrilling but also comes with important tax obligations. All cash and prizes valued over $600 are considered taxable income by the IRS and most states. Income, luxury, gas guzzler, gift, and capital gains taxes may apply depending on the type of prize. Overall, expect to lose around 30-40% of winnings to federal, state, and sometimes local taxes. While no one likes losing a chunk of their prizes to taxes, properly reporting and paying what you owe helps avoid tax headaches down the road.
