Reality Contestants - How to Avoid Getting into a Richard Hatch Predicament  3/12/05

Recent reports have surfaced about the original Survivor contestant Richard Hatch having a problem with the IRS.  According to news reports he failed to report his one million dollar prize to the Internal Revenue Service.   His excuse appears to be that he thought that by appearing on the show he was an employee of CBS and they would pay his taxes.

Some basic things that one should consider when appearing on any game or reality television show:

* You are not an employee of the company by virtue of competing for a prize.  If you are an

    employee your salary or hourly wage would be clear to you.

* Always read the entry forms or applications and subsequent contracts that you sign.  Note who

   will be responsible for taxes on any prize that you receive.

* Even if you do not get any tax reporting forms, you still must report all prize income on your

   income tax form.  If you think are an employee you definitely have to report your income.

* Pay attention to any tax reporting forms.  If you get a 1099 form then you are responsible for

   reporting this on your return.  If you receive a W-2 form then you are considered an employee

   and this will detail amounts withheld for state, federal and payroll taxes.  All this must be

   included on your tax return.

* If you do win a million dollars, especially on national television when 40 million people are

   watching, you should consider hiring a competent CPA or tax lawyer to make sure that any tax

   return you file is not likely to land you in jail.  Folks at the IRS watch television like everyone

   else and some agent might just take an extra peek at your return for accuracy.

* Finally, remember to never, ever, ever screw with the IRS.