Oprah's audience had to pay 7K in taxes

iVillage Member
Registered: 05-19-2004
Oprah's audience had to pay 7K in taxes
4
Thu, 09-23-2004 - 9:28am
for those cars she gave away! Each person had to pay $7000 in taxes!!! I saw that on CNN this morning!! Weren't those cars just Pontiacs? Why so much? I could not have afforded to keep the car-- would you guys? Would it be better to just sell the car? I'm baffled.

On another note, I was reading a book (not debt related) and the author wrote something that really clicked with me. He was talking about how companies get consumers to buy their products and he said they count on you wanting their product more than you want to keep your money. So you think to yourself " Do I want this shirt more, or this $25 more?"

I never thought of it like that- it was always "I really like that shirt, it's $25, but I'll make that up in tips fairly quick. It's just $25" I guess think of it as if someone walked up to you and said "Pick between this $25 in cash or this shirt" I'd take the money in a heartbeat.

Sorry for rambling....Nicki

Avatar for cl_beckymk
iVillage Member
Registered: 03-19-2003
Thu, 09-23-2004 - 10:16am

I had wondered about those taxes; it was mentioned that someone thought the car company was covering the taxes for them too.


I'm not surprised at the $7,000 since they would be taxed on the full retail value of the car plus I'm not sure if gift tax is a higher bracket or not.

iVillage Member
Registered: 06-18-2004
Thu, 09-23-2004 - 10:34am
The reason the tax is so high is because the value of the car will count as income tax for state and federal tax purposes. It is considered a prize. Because of the car's retail value (almost $28,000), that will send the winners into a much higher tax bracket, one where they will have to pay about 25% tax. The good news is, the winners have until Feb to claim the prize, so they won't have to pay taxes this year. They can spend the rest of this year and all of next year, really until April 15, 2006 saving the money for the tax bill.

I know Oprah was trying to help, but I don't know if this is the kind of help that is needed, but then again as one winner said, where can you get a brand new car for $7000?

Kellie

iVillage Member
Registered: 04-30-2003
Thu, 09-23-2004 - 12:50pm

I heard that and was in shock. I'd probably take the car, sell it, hold onto the $7k for taxes, or send it to the IRS already (if I can), and use the money to pay for other things. BUT, if I needed the car, I'd sell it and and buy something cheaper. Like my Honda Civic. lol. I mean, if I bought a Civic at $16k, sold the Pontiac for $25, kept $7 for taxes, I'd still have $2k for bills.


I figured the car would've been considered a "gift" not a "prize". But okay.


Alas, it is a car for $7k. =) And I'm sure some ppl REALLY needed it.

~Cher




my pet!

iVillage Member
Registered: 03-29-2003
Thu, 09-23-2004 - 12:51pm

I agree..lol...thats a nice car for only $7!


This article http://abcnews.go.com/wire/Entertainment/ap20040913_1065.html