The outfits are picked, parties planned and the votes for the 2023 Oscar winners will be tallied. This weekend, Hollywood’s nominees will gather for the 95th Academy Awards ceremony. And while most hopefuls will not be walking away with the coveted eight-and-a-half pound (yes, really) statuette…they will still have something to smile about.
This year’s “swag bag” – given to all Academy Award nominees – is said to have a whopping estimated value of well over six figures. It’s not “just an honor to be nominated,” it pays! But what are the potential tax ramifications of receiving luxury vacations to Italy and Canada, facial rejuvenation procedures, or luggage sets (to name just a few of the expensive items included in the swag bag)?
For starters, the recipients will need to claim the fair market value of the bags as ordinary income rather than as a gift. A 2006 agreement reached by the IRS and the Academy of Motion Picture Arts and Sciences created this rule.
Assuming the celebrity is in the highest tax bracket and a 37% rate applies, this year’s swag comes with a hefty tax price tag that could be close to $50,000 depending on the exact value of the swag bags. That may have some celebs seeing a red light rather than the red carpet. On the bright side, recipients of the goodie bags are allowed to donate the gifts to charity and receive a tax deduction, but they still have to claim the gifts as income.
You may not have an Oscar nomination in your future, but any winning bets you place on Oscars nominees, as well as any other gambling, lottery, raffle and sweepstakes winnings are taxable income. TurboTax will ask you about winnings and will help you every step of the way if you had a very lucky 2022. Ready for that refund? File today!
Don’t worry about knowing these tax rules. Meet with a TurboTax Full Service expert who can prepare, sign and file your taxes, so you can be 100% confident your taxes are done right. Start TurboTax Live Full Service today, in English or Spanish, and get your taxes done and off your mind. You don’t have to leave home, and you can be ready for the Oscars!
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