TurboTax: Do Oscar nominees pay taxes on "swag"?

Woman at Oscars Red Carpet

The outfits are picked, parties planned and the votes for the 2020 Oscar winners will be tallied. This weekend, Hollywood's nominees will gather for the 92nd 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 over $200,000. It's not "just an honor to be nominated," it pays! But what are the potential tax ramifications of receiving cannabis chocolates, an exotic, luxury small-ship adventure or even up to $25,000 in cosmetic surgery (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 $80,000 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 2019. Ready for that refund? File today!

If you have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent with an average of 15 years experience to get your tax questions answered. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish and can review, sign and file your tax return so you don't have to leave home, and you can be ready for the Oscars.

Brought to you by TurboTax.com

How to Report FAFSA College Money on a Federal Tax Return

Each financial award you receive from the federal government will have separate and unique tax consequences for your federal tax return.

Read More

Brought to you by TurboTax.com

States with the Highest and Lowest Taxes

Where you live can help or hinder your ability to make ends meet. A myriad of taxes—property, license, state and local sales, property, inheritance, estate and excise taxes on gasoline—eat away at your disposable income. Weighing the tax landscape against your financial picture lets you stretch your dollars.

Read More

Brought to you by TurboTax.com

Tax Aspects of Home Ownership: Selling a Home

Though most home-sale profit is now tax-free, there are still steps you can take to maximize the tax benefits of selling your home. Learn how to figure your gain, factoring in your basis, home improvements and more.

Read More

Brought to you by TurboTax.com

Guide to Filing Taxes as Head of Household

The IRS has provided a series of guidelines to help taxpayers understand whether or not they qualify to file as head of household.

Read More

Brought to you by TurboTax.com
Read Full Story
Your resource on tax filing
Tax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.