Message Font: Serif | Sans-Serif
No. of Recommendations: 0
From my vantage point, the only way that the bonuses can be tax free is if Oprah pays the tax on behalf of the recipient. And even then, the tax she paid on behalf of them would be income to the recipient. There is a complicated formula that would determine how much extra funds Oprah would have to give them so that the bonus + tax given to the recipient would result in zero tax to the recipient. It goes something like this:

Bonus $5,000 X 20% tax = 1,000
Tax on $1,000 X 20% = 200.00
Tax on $200 X 20% = 40.00
Tax on $40 X 20% = 8
Tax on $8 X 20% = 1.60
And on and on until you get to zero.

So Opera would have to pay to the recipient $6,249.60 in order for the $5,000 to be tax free to the recipient.

I used a 20% tax rate just as an example. The recipient would have to tell Oprah their tax bracket and this would vary by indivuals, with some receiving more than others but still $5,000 after taxes.


Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.