Tuesday, April 18, 2017

On Tax Day, How Much Would the Winner of BB Pay?


Just for fun, let's take a look at how much Uncle Sam wins every summer from Big Brother.  Some of you know that I am actually a CPA with my own tax practice.  Today is the filing deadline for 2016 tax returns --- I have been working every day since December 27th so I am quite happy today is finally here.  In fact, I plan to be nearly incoherent in just a few hours, which can't come soon enough for me.

The tax deadline is usually April 15th, but due to weekends and an obscure holiday, we all got a few more days to make things happen this year.  At this point, I'm dealing primarily with people who require A LOT of patience, which is running low right about now.

Did I say "low"?  I actually mean, "very, very, very low".

So like I said, just for fun I ran a tax return for a hypothetical winner here in the US, so we could all get an idea of how this works.  I have assumed the following, which may or may not approximate reality:

*  The winner of BB is a 20-year old with no dependents, and no other (reported) income.

*  The winner of BB is also not a dependent of someone else.

*  The BBUS grand prize of $500,000 was reported on Form 1099-MISC in Box #3, as "Other Income", which is appropriate as this is how prizes are reported, as compared to payments made to a worker, which are reported in Box #7 ("Nonemployee compensation") and also face steep self-employment taxes in addition to income taxes.

*  The winner of BB does not itemize deductions, instead taking the standard deduction.

*  The winner of BB had qualifying health insurance coverage all year, avoiding the dreaded "Fair Share" tax assessment (i.e: the "ObamaCare" penalty).


And here is the result:

Federal Tax Due                  $151,675
Underpayment penalty              3,626

Total Due to the IRS            $155,301

Ouch, huh?  That hard-fought prize money just got whacked down to $344,699, and we haven't even looked at the state taxes yet.  Note that the IRS is a "pay as you go" system, meaning that they expect you to make tax deposits regularly throughout the tax year, rather than in one big chunk at year end.  If you don't pay in enough through payroll deduction or other quarterly payments, they charge an underpayment penalty.  (This differs from the "Failure to Pay" or "Failure to File" penalties, if you're keeping score at home.)

I'm pretty sure that CBS will withhold some taxes from the payment for you, if requested to, but penalties would still be incurred since the payment would have occurred near the end of the tax year.

And now for the state taxes.....the winner of BB US also has to file a California state tax return, because that is where they earned the money.  In fact, each BB contestant should file a California state return, because they also earned their stipend or prize money while "working" in California.

Fun Fact:  Professional sports players have to file a tax return in each state they play in.....nobody needs a good professional money manager they can TRUST more than a professional athlete.

So, California might be a beautiful state, but their state individual tax form is not very aesthetically pleasing.



And that's another $47,544 that the "lucky" BB US winner needs to shell out.   So now we need to update the prize money for this financial setback.

BBUS  Prize Money            $500,000
Federal Taxes Due               (155,301)
California Taxes Due          (  47,544)

Prize Money, Net of Taxes   $ 297,155

And we haven't even paid the CPA's bill yet!  And note to any future BB winners, if your tax return is actually this simple, you shouldn't be charged more than just a few hundred dollars for it.

*** TAX DAY BONUS ***

Today the accounting world was abuzz with this news, that also quickly became tabloid fodder. (You can read the entire article here.)


Look, the IRS doesn't just "drain" your bank account out of nowhere.  Before they actually make any withdrawals, they send you all sorts of scary letters and notices that they plan to do this.  The letters and notices are sent on a schedule, slowly escalating until they have no choice but to get the seizing underway.

I've seen the scary letters and notices, and it makes my heart pound to even think about it.  But I've never seen a situation where the assets are actually taken.  Tori should have given the letters and a Power of Attorney to a reliable CPA or probably even a Tax Attorney to communicate with the IRS on her behalf.  Maybe even negotiate a settlement, and a time frame for clearing things up.

There's no need for any seizure like this to take place, if you have the right people helping you, and the will to clear it up.

Poor little rich girl, huh?

Monday, November 28, 2016

Tidbits, Trinkets & Trash: Let's All Give Thanks That This is Almost Over. #BBOTT


OK I know I am late, but this will likely be the last post for the BBOTT season.  I did not plan to watch BB after September (since a second season was unprecedented), but for the most part I have been interested in this season and have enjoyed keeping up with all of the action, even if I didn't post about it every day.

If you are a longtime BB fan, I don't need to tell you how ugly and nasty the fans have acted in the last few months.  There has only been one season in recent memory where the person I originally picked to win ended up winning.  In most other seasons, I end up shifting my allegiance to whoever was still in the house that I felt like I could still root for.  And in at least one season, I walked away from the finale totally disappointed, with not much to cheer about.  But in every BB season I have found something to talk about on this website, even if I am just focusing on the action in the kitchen.

And I have NEVER posted hateful things about ANY of the house guests.  I have NEVER attacked the house guests, or their family or friends on Twitter.  And I just don't understand the people who do, particularly all of the HATERS on certain websites.

LOOK:  I'm probably older than you are, and I have had a full life, both work and personal.  You are all going to have to deal with disappointments.  You are going to lose out on jobs, and also promotions, and you probably won't feel like it is fair.  You might even hate your boss, and his or her boss, too.  You are going to lose loved ones, and will probably feel the sting of rejection in a hundred different ways .  But it is HOW you deal with these events that defines you a a person.  You can choose to have a POSITIVE impact on other people, or you can be a HATE-SPREADING wretch that other people will want to AVOID.  The choice is up to you, but everyone faces karmic retribution at some point.

****

When you see the Jenga game or a deck of playing cards, you know that Production is winding things down, and that most of the action of the game is over.  And that is the case with BBOTT, too. If you haven't been watching, I will try to bring you somewhat up to date.

*  Shelby was evicted last week, leaving the Final Four of Jason, Kryssie, Justin and Morgan.

*  Shelby had been practicing and practicing what she thought would be a SHOCKING eviction speech, that disclosed her law school status.  But as often happens when you memorize speeches, she fumbled her words, but eventually got her message out.  I'm not sure if she got the reaction she hoped for, but it did give everybody something to talk about after she left.  (Kryssie told Morgan later that she heard Shelby's DR leak about taking the LSAT, but didn't discuss it per BB's instructions.)

*  After Shelby left, Morgan came clean about Alex being her sister, and they all enjoyed a lively discussion about that.  Jason wondered if Alex told Scott about it, and Morgan said that Scott had no idea that Alex and Morgan were sisters.  If fact, Morgan told everyone what Scott said to Alex about Morgan being "too basic to win the game", and they all had a good laugh about that.

*  The Final Four played their last HoH competition last Wednesday night.  Julie told the house guests that the big, GAME CHANGING situation was that the HoH would be able to pick one other house guests to take to the Final Three.  The remaining two house guests would battle it out in one final competition to decide who would be evicted in 4th place.

*  Jason didn't just WIN that HoH competition, he ANNIHILATED it.  Each house guest had a large playing board that looked to be at least two stories high.  Their objective was to put all 12 HoH winners in order by rolling a ball into the appropriate spot from their place on the ground.  They could not see the other contestants while the competition played out, but they could hear them huffing and puffing, and could hear balls dropping off the playing board.  For some (stupid) reason, Morgan, Kryssie and Justin all started at the top, which required them to maneuver the ball to the highest spot, around a number of obstacles and potential pitfalls.  But Jason's strategy was to start at the bottom, which seemed obvious to me.  He was able to get the feel for moving the balls around by finishing all of the lower items first.

*  When Jason won, I don't think either Justin or Morgan had even one ball in place, and Kryssie only had three. So it wasn't even close.  It was a decisive win, and the other house guests were SHOCKED that Jason won so quickly.  Kryssie can say that she "almost won" as much as she wants to, but there was no "almost" about it.


After a short time, Jason got access to his HoH room.  He received several new pairs of underwear, and lots of root beer that apparently contained alcohol.  And also a still-warm bucket of chicken wings, which are one of Jason's passions.  He invited everyone to enjoy the wings with him, and Kryssie and Justin both took him up on the offer.  I think Morgan had gone downstairs at this point--not sure if she's a wing girl, anyway.



Thursday, November 17, 2016

Tidbits, Trinkets & Trash - The Final Five Face the Facts. #BBOTT

Last night the festivities started at the new time, two hours earlier than it usually does on eviction nights.  This was MUCH appreciated by all of the East Coast live feeders, since the HoH comps have been starting well after midnight for us all season.


Last night Danielle was evicted by a unanimous vote, and left without seeming too salty.  She looked gorgeous, and everyone gathered at the Memory Wall to watch her picture turn to black and white.  It's funny, because after the first eviction, when Cornbread left, only Jason and Scott stood at the wall to watch this BB tradition.  But now everyone does it...it's a rite of passage in the game, sort of like attending a funeral for a comrade.


The HoH comp started around 10:00 PM EST, after a short FISH break to give the house guests instructions.  This was another good comp, although it was rather uneventful to watch much of the time.  Basically, they started with Shelby asking the players seven different questions about gender differences in the game, questions that were difficult to anticipate or prepare for.  Questions like, "who placed more votes to evict this season, males or females?"  Shelby asked each player to lock in their answers, and then we went to the next question without learning that the correct answer, or who answered correctly.

There were some long pauses while Shelby waited to be prompted after each question, dragging out the process somewhat.  But I'm sure Production was checking to be sure they had the footage they need, and noting the recorded answers before continuing.  Once all of the questions were completed, it was time to start the balance portion of the competition.  BB asked them to wipe their shoes off on a special mat each of them had in their booths, so they wouldn't be too slippery.