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Uncle Sam Spoils Dream Trip To Space
gollum123 writes about a dream come true and a dream dashed. Brian Emmett, a software consultant from the San Francisco Bay area, entered a contest sponsored by Oracle in 2005. He answered some questions on Java coding, won a free trip into space, and then reluctantly gave it up. The latter decision came once he had computed the taxes he would have to pay on the $138,000 prize — roughly $25,000. From the article: "Since the Internal Revenue Service requires winnings from lottery drawings, TV game shows, and other contests to be reported as taxable income, tax experts contend there's no such thing as a free spaceflight. Some contest sponsors provide a check to cover taxes, but that income is also taxable."
What if instead of giving him a free trip they gave him the chance of take a discounted trip, only charging him $1?
"In Soviet America, Passport Stamps You!"
If they award him the prize while he's in space, do US tax laws still apply?
Seth
$5 / month hosted VPS on linux = awesome!
Yeah, I'm sure he had a problem affording it... but I'd have gone even though that's a substantial portion of my yearly salary. The only thing I can think of is that he might have been in the middle of a divorce - and if his salary was reported to be 138k higher per year, then his soon to be ex might have a much higher alimony. One that he couldn't afford to pay.
Your sig(k) has been stolen. There is a puff of smoke!
They attack this problem in Australia (and other places) by taxing the organiser of the lottery, all advertised prizes are for the "after tax" value, if it says "First prize: $1M" and you win, you get $1M. The taxman doesn't hassle you because he took his cut before you got your cheque. Not sure how you would go if you won a foriegn lottery?
OTOH: Get a $50K reward from Loyds of London for bravery (of the "are you insane" variety) that saved an oil tanker from sliming the costline near Perth and you will have to pay tax as if it was additional income for that year, ie: the taxman will take 30-50%.
And did you exchange a walk on part in the war for a lead role in a cage? - Pink Floyd.
Anti-American Drivel. And I suppose the US is the only country where these sort of taxes occur?
I've been living in the Netherlands for the past 15 years.
Ever since Fortuyn's party was voted out and the CDA and friends moved in (sorry for the political references!), things have been going downhill. I understand the benefits of having a welfare state, and yes, they did slightly improve healthcare, but taxation has been a disaster.
So if you really wanted to know someone who turned down a pay rise, then pleased to meet you. No I won't come and work for you. This was in '96, and I admit it wasn't a significant increment, nor was it a significant position. Granted I left the company shortly after. But the fact of the matter is, I was not in a financial position to accept that raise.
One could argue that things are improving, and this is an exceptional case. Me, I think only drastic change would bring that about.
I know this isn't the best place to be go on about our country, but if you're in Emmen anytime, look me up at Groothuis!
If he had moved to Canada just before the drawing, and won the contest while living and working there, the contest would not be taxable, since Canada does not tax lottery or gambling winnings, unless they are your "primary source of income" (i.e. unless you're a professional gambler / poker player / etc).
I mean, after all, how often do you get to go into space?
In the older days there was a point where your payrise would bump your income enough to reach the point where you where forced to leave the cheaper healthplan and had to pay lots more for your own health insurance. The trick was to get a quick payraise after that because the net income was a little lower then before if this happened to you (not to mention that you had to pay the medical bills upfront and fill in declarations to get the money back).
Low income jobs have the same problem. People will eventually lose rent assistance when their income gets better making a payrise not always desireable.
It's not a myth...
There are plenty of examples where earning more money, means you end up having less to spend. For instance college expenses, over a certain income level you no longer qualify for need based aid, that means you are footing the entire bill yourself.
Retirement contributions decrease or eliminated over a certain income level. Making more money can throw you into a higher tax bracket, or worse get you caught up in the AMT (believe me, you don't want to go there).
There might be another alternative - what about they hire him for the duration of the flight, say, as research for the company doing the rides -- they hire him for minimum wage for one day, and give him some special questionnaire to fill out after the flight. In this case, his ride would be work (gather information on the "end user experience")...
He might have to tax the minimum wage, but the company could completely write off the money spent to send him to space in the first place, as it's a work requirement. (i.e. treat the space ride as a "business trip")...
(oh - and yes, if he researches the 'experience' of the offered flights, it should well be possible for him to completely (and determinedly) "enjoy" the flight - so as to be in a better position to say what the company might want to improve for future customers...
Shouldn't that be possible?
Those exclusions, if they applied (VEEEEEEEEEEEERRRRRRRRRRRRRRRY doubtful), would allow the prize giver to not pay gift taxes but they wouldn't make the receipt of the gift anything other than taxable income.
Here is why its very doubtful: for the educational exclusion to apply you need to be enrolled at, quoting the IRS, "[an institution] that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students". That will almost certainly exclude the classes you'd take pre-flight. It also only covers tuition, not expenses. Since they aren't charging you tuition its not applicable.
Similarly, it is unlikely that your pre-flight testing counts as "medical care" as the IRS defines it. You could make an argument that the pre-flight testing is "diagnostic" for a disease but its not one I'd like to have to face down an audit with.
Help poke pirates in the eyepatch, arr.
I live in a country (Argentina) where you have to pay a 21% tax for almost everything you buy (the Value Added Tax, or VAT, just like in the UK). Some items (Such as milk, or curiously, computer parts, have 10,5% VAT, while most others, like TV sets or CAT5 cable, have 10,5% Tax. Finally, Telephone has 27% VAT). That's when you buy something.
When you sell something, you have to pay the VAT, but only for what you're earning (that is, buy for $100 and sell for $120, you pay the tax for $20, not for $120). That means, if you're a "computer tech" like me, you don't "buy-and-sell", you just sell. That is, if I charge someone $ 300, I have to pay the tax for $300. Also, besides that tax there's the Gross Income tax, 3,5% (yes PERCENT) of EVERYTHING you earn, whether you have made profit of it, or not. The VAT is for national government, and the Gross Income is for the province.
As if that wasn't enough, we have a plethora of taxes you could never dream of, such as the Check (UK: Cheque) Tax, the Money Transfer tax, the "sending money offshore" tax, etc. Whenever someone deposits a check in your account, the government just goes and grabs the tax for it out of your bank account (that's right, they just go and grab it). You can write that off your Gross Income tax, but if you, for some reason, got a big check, more than what you declared in Gross Income, all you get is fiscal credit, not money back from the government.
Oh and don't let me get started on the 'Rich' tax ("Impuesto a la riqueza"). If you're "rich", you pay more. Rich, was someone with $100.000 or more in their bank accounts. Before devaluation, people who had $50.000 pesos (= US $50.000), didn't pay for the tax. Then devaluation came, and people had $50.000 pesos (= $16.000 USD). They sued their banks (the banks, prior to the devaluation, and with the help of the government, didn't let you take out more than $1000 a day on cash). Most people got their original money (USD 50.000), but now it was $150.000. So, people had to pay the "rich tax". That means most citizens here in Argentina are rich. Because not only your cash counts: your car, house, boat, whatever, counts for the rich tax. And a house and a car are worth more than $100.000 pesos, so you pay the tax.
Also, the tax is higher for new cars than for old cars. So people have no reason to "upgrade" their cars, and you see a lot of cars from over 10 years ago.
With all these taxes, you'd think we would have streets covered in gold, Xenon street lights, and public employees that welcome you with a big smile and don't make you wait. Not to mention, some of the best colleges and schools in the world.
But no, we get a terrible education system (the Systems Engineering career hasn't been updated since 1995, and a law project that will allow 1st graders to pass whether they have had good grads or not, because repeating a grade will hurt them psychologically. Also there's no punishment system in the schools. Previously you had points, and when you had too many, you got expelled. Now there's no such thing. You can't even expell a student. My mom was the substitute principal at a school, in her last day as principal, a kid (about 16) shot another kid in the leg. None of them got expelled, or anything. They even tried to blame it on my mom (wtf?). In another school, an 11 year old boy was trying to rape a 6 year girl. The teacher kicked the door down, found both of them half naked, the girl crying. The boy tried to run away, she slapped him so hard, he passed out. They tried to let the kid stay at school and SEND THE TEACHER TO JAIL for hitting him. They managed to get the kid out of that school, and let the teacher stay. All of this because the girl's father was a military general or something, who pulled some strings. If it wasn't for that.. you could imagine.
Also, there's a lot of "insecurity". In some parts of the Great Buenos Aires area, you could get killed (they kill you first and then they rob you). Streets aren't clean, and a pothole could take years to be fixed
Flame away but I'll diss them all I want. It's all about choices. Some of us are smart enough to hold of on having children until we have enough income to afford the larger home and all of the additional expenses that come along when you make the decision to have children. So don't bitch and moan and wine about how you have to have 3 jobs to make ends meet when you are there due to poor decision making. Some day I'll have kids but I'll chose to do so responsibly, when I have enough income to comfortably make ends meet without having to work so much that I never see and take part in raising my own children. If you've got to work so much to make ends meet when you have kids and as a result you never see them and can't properly raise them why did you have them in the first place? I don't look forward to having my tax dollars used to keep them in prison when they grow up to be criminals as a result of daddy issues. If you don't make enough money to support your children with enough free time to be able to raise them do us all a favor and don't have them.
Before the advent of birth control you'd have my sympathy but not today. Having children today is a choice. Options are readily available to allow you to have children when and if you choose. Of course, if you're a man that can also mean depending on your significant other to have the same priorities as you but come on. Find someone who has the same priorities as you. If you don't want kids until your ready use a condom, make sure the women you're with is on birth control and never get involved with a women who won't have an abortion if it came down to it. Problem solved.
Well, everything in the list can be provided privatly. The problem is that policing and such would tend to favor those paying for it. Thats why the government is better at providing it. We didn't always have a government providing these things but we have did always have businesses and the ability for people to make a living.
But to the story, the government should treat winnings like income becuase that is what they are. If you were to go and purchase the prize seperatly, be it a trip to space or just a bag of groceries it would need to be paid for by income that you recieved at one point in time and that income was subject to the tax code (taxed). Just because you won it doesn't mean much other then your luck into a good source of income.
The freeman stand off a while back resulted from the government going to a comunity were people were trading work for work. Someone would paint a house and that person would fix the roof for his house. sometimes they would trade a pig or somthing for the roof getting fixed. the government said that because something of value changed hands even though it wasn't money, it is still income and they needed to pay taxes on it. So I guess one of them wrote a check for three hogs and a chicken and passed it to the/a tax agency promting visit that ended up in a standoff.
The point is that the government claimed that whenever something of value passes from one person to another, unless another law prevents it, it still counts as income. There doesn't apear to be a law preventing winnings from being income. Certain incomes like gifts giving in the family aren't considered income to a degree (I think if they are over a certain amount they might be income).
Something thats confusing is the question of why he has to pay the taxes now? It will be some time before the prize/trip is even remotley possible and therefore paid out. I know the prize was won last year but there is no guarentee it will ever be anything then a symbolic gesture. A number of things could happen stopping the delivery of the prize. A test flight could blow up killing hundreds resulting in bankruptcy for the company or the government could ban all comercial space flights carrying passengers or they could place some requirment on health that the winner cannot meet by the time it is actualy feasable.
Surely if there are possabilities for not getting the gift/prize, then why isn't it being treated like stock options? You don't pay taxes when your company gives you a stock option until you take those options, if you ever doo. This would give the guy enough time to save for the taxes and if certain political parties gain control of the house ad senate, the tax burden might even be lower by then. If sun would just release a voucher to claim the prize when it becomes possible, I doubt it would be a winning that counts as income until it is redeamed. Surley he can save the 25 grand needed in 4 or more years or so. Maybe even take a morgtage out on the house and deduct the interest for the tax burden on his taxes.
I'm not the grandparent, but I was going to post just the same thing. What isn't true? Well, when he says Systems Engineering hasn't been updated since 1995 he must be talking about a particular university, since each university has a different programme, mine had a major update in 2001 (or maybe more recently, I'm not sure), and a few minor ones as well. The VAT part is true, it's way too high, and it should have been lowered years ago. As for the taxes, well, they are meant to lower the difference between the rich and the poor, which is rather bad (and getting worse) here. The old car complaint is typical of right wing people. I even heard one military say that all pre-1985 cars should be banned from the streets. Truth is, it's not so bad in some ways. Currently there is something called the VTV (vehicular technical verification, same acronym in Spanish) which is a sort of certification for your car, it used to be that if you didn't pass it, your car couldn't be used on the roads, but that has changed now, I believe. I think whether a car works well or not is more important than the year. Some cars are badly beaten up, a few months ago I saw a car that was twisted 20 or 30 degrees when going forward, so from behind it looked like it was about to turn left (I saw it right before we reached a left turn, so it confused me badly). Of course, VTV is good in theory, in practise there is a lot of corruption, but hey, that's everywhere here. The education system is not so bad, although it used to be better, and there is no gold plating anywhere save some places for the rich. That teacher that knocked an 11 year old unconscious, sounds like he was out of line, unless he was abnormally small and the 11 year old abnormally large, he could have pulled him aside with a single hand. He might have deserved the slap, but we have laws and a court system. The 11 year old obviously had some mental issues, and he should be treated. What is needed is less corruption, often we have good laws but they are applied selectively or not at all. Most drivers here don't use signal lights, and when they do, they often use the wrong ones anyway... Some people don't even know we're supposed to drive on the right side of the road, which is not the left one ;)
Oh, and that guy who thinks that's similar to Norway (or the other one comparing Argentina and Finland), he's nuts. Argentina is nowhere near Norway (yeap, I've been there, and not on a tourist trip or anything similar). Jeg kan snakke norsk ;)
Ho ho ho, very clever. I did not say that any person has the right to limit what any other person does with any property. As an example, it is illegal for me to hit you over the head with my computer. It is illegal to put child porn on my computer. It is illegal to smuggle drugs in my computer. It is illegal to sell my computer as somethign it isn't.
The more societal force it takes to protect something, the more society has a right to regulate that thing. It takes much less societal force to protect personal posessions than it does to protect real property, so society has more of an interest in regulating real property than it does personal posession.
It is also about right to ownership. Only through working on a thing, mingling your labor with that thing, can you call it your own. Yet real property and natural resources must be claimed BEFORE they are worked. Thus, there is no justuification for the intiial taking of the resource. Until a private individual claims a resource, that resource can be shared by all. Therefore, absent any valid claim, and taking into account the vested interest society has in all unclaimed reources, all claims to real property amount to theft.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
I mean, we're talking about a trip into space.
I find it distressing that it took three pages in this thread to touch upon this point.
A friend of mine took an economy trip to India, and once there, the opportunity arose for her to go to the Himalayas, but to get there, she had to dig into a part of her bank account she hadn't counted on. Stuck in this dilemma, she called her mom for advice ("I gotta pay the rent when I get back, light, water, etc...", you know the drill), and her mom said: "Honey, you're going to be paying bills the rest your life, but you're probably going to be in the Himalayas just this once". On that cue, my friend went for it, and she now describes the excursion as the best and most spiritual experience of her life.
When I was a university student, the opportunity arose to go skydiving, and even though I couldn't afford it, I tightened my belt for a while before and after (ate only fruit, bread and water more nights than not, parked the car for a few weeks and took the bus instead) and went out and did it anyway, a forty-five second solo freefall, even passing through a cloud!
I know that $25k is a helluva lot of money compared to the cost of the experiences I write about above, and that the sweepstakes company will take a lot of deserved flak for not including the taxes on the prize, but goddam it, look at the payoff if the guy does it! To be in a zero-G environment for a prolonged period of time, looking down at the Earth? He might be in debt for a couple of years, but he's also gonna be transformed in unimaginably positive ways, it's a childhood dream come true!
If nothing else he could write a book about the experience and recoup some of the expense.
That might take some time. In the short term, it's definitely worth a couple of appearances on talk shows at least (I'm thinking this is even Oprah material), giving him a prestige worth a salary increase or even a new, better paying job elsewhere. I haven't RTFA, but from what I'm getting, this guy, instead of being creative and gutsy and really making the effort to go for it, is thinking linearly (with horse blinders) and thrown in the towel. If I did that under similar circumstances, I'd never be able to forgive myself, I'd see myself as failing a supremely significant personal test and opportunity.
Lil' Thindime, lilting a lacrimose lament, krashes the kwaint konfines of Kokonino Kounty
Some of that happened in Brazil a couple of years ago. Only it was a paramilitary force, the Death Squads. They came out at night with their AK's and gunned down the kids that were in the street. Hundreds of kids were murdered that way in São Paulo. They got to that situation, I think, for different reason than the Skinheads. The nazis do it just for fun. These guys did it for real, they saw it as a solution to the problem, and they systematically did that every night, for months.
How did Brazil got to that situation? Well, years and years of ignoring the law, judges that let people free because they were minors, drug lords buying the police, etc. This is happening in Argentina too, but at a minor scale (I think because of the less dense population in the Great Buenos Aires area).
The right-wing is trying to lower the age that minors can be judged for a crime (currently, a 17 year old kid can commit murder and basically walk free the next day, because he's a kid and he can't understand what he did, so he can't be held responsible for his own actions. Well, he doesn't actually walk free the next day. Most times, the police makes sure he can't walk the next day. Many times, they can't walk ever again.
But the lefties hate the idea of people going to jail. They want laxer laws, they make you look like a criminal if you say minors should be in jail. And it's all going to hell, because the president is kind of a leftie. 2007 is a presidential election year, so the government is making a lot of announcements of how they managed to reduce unemployment (they count "unemployment insurance" as employment, and that way they reduce unemployment in a 2 or 3%), etc. But the media that is against the government, as usual, shows the reality. Murders, robberies, etc. Now the trend is to go into old people's houses and beat the crap out of them to rob them $200 or something, which is all they have.
I remember a particular case. A 12 year old kid robbed an elder person. The man didn't have money, just change. He gave it to the kid. So the kid told him, so you don't have any money? Then I have to kill you. And he did. The kid just killed a man just because he didn't have money. Or kids that beat (or kill) other people and then go to the cyber-cafe around the corner to play some counter-strike!. But the lefties justify all of that. They're poor, they don't fit in society, they come from a violent background. Yeah, right. That's bullshit. They're poor because they parents don't work and have 7 to 10 kids. They don't fit in society because they have BAD MANNERS: you can see that in their houses, they throw the garbage out of the window, they yell and have loud music all the time. They come from a violent background because the father drinks and he gets violent. It's bullshit that they can't get decent education. Schools here are FREE, they even give FOOD to the kids. But no, they don't like school. So, they don't get education because they DON'T WANT TO. Seems that your right to play counter-strike is more important than my right to live, down here in Argentina.