Why are trips and prizes won on game show taxed even though they are said to be “free”?


Why are trips and prizes won on game show taxed even though they are said to be “free”?

In: Other

Because it’s counted as an income just like everything else.

Private companies can’t stop the state from collecting taxes.

Because things that are free still have monetary value and the government is interested in the monetary value of goods and services you receive in order to tax them as income.

It’s income tax, not sales tax. They’re not charging you for it, they’re giving you something of value.

Because that’d be a huge tax loophole if it weren’t taxed. My company could pay me minimum wage, and then give me “prizes” instead of a salary. I’d love it because I wouldn’t need to pay income tax on it. They’d love it because they could afford to pay me less (since I’m getting less taken away from the government). The government wouldn’t get any money.

“Free” just means that you didn’t do any significant work to earn it. But it’s still income, and thus is still taxed. The government has no reason to exempt it from taxation like any other income.

In the UK prizes on game shows, gambling and the lottery are tax free.

There are rules around what constitutes gaming and prizes though – it has to be open to entry of more than one Person – there has to be a legitimate chance of you not winning – winning has to be a game of skill or chance.

But if you win the lottery it’s all yours.

In the US, the fair market value of large acquisitions are considered income. If you win a $100,000 car in a game show, the IRS considers that equivalent to being handed $100,000 in dollars for income tax purposes.