‘The Amazing Race’ prize is $1 million. How much of that do winners get to keep?
Raleigh internet personalities Kim and Penn Holderness won Season 33 of “The Amazing Race,” bringing $1 million in prize money back to North Carolina with them.
This made us wonder: How much of reality show prize money do winners actually get to keep?
The News & Observer chatted with Roby Sawyers, undergraduate director of NC State University’s Department of Accounting, to learn more how reality show winnings are taxed.
How much are prize earnings taxed?
“They most certainly will not keep the whole million dollars,” Sawyers said of the Holderness’ prize.
Prize earnings are subject to federal and state taxes, since the $1 million (which is a joint prize) will count as income. (Note: The couple also won other cash prizes and trips during the show, for coming in first during various legs of the race.)
Here’s what the breakdown looks like for the grand prize:
▪ Federal taxes: “If you look at the $1 million earnings like it’s the only income they have, my calculation has $300,000 taken out in federal taxes — 30%,” Sawyers said. “But this number looks different with other income and children in your home.”
▪ State taxes: “In North Carolina, we essentially have a flat rate at 5%,” Sawyers said. “So on top of the $300,000, you’re looking at another $50,000 in state taxes.”
If the earnings are only subject to federal and North Carolina taxes, about $350,000 will be taken out, Sawyers said. But if they’re also subject to California taxes (where “The Amazing Race” show is based), this will put that figure around $400,000.
California’s tax rate is about 9% (almost double of North Carolina’s). But if the Holderness pair were to pay tax on this $1 million in California, then North Carolina would give them a credit. This would reduce North Carolina’s tax rate and have them pay the majority of their state taxes to California.
“It’s more confusing than it needs to be, but that’s probably how it’s going to work,” Sawyers said. “The bottom line is they’re going to be pretty doggone close to $400,000 in total taxes.”
This story was originally published March 3, 2022 at 2:56 PM with the headline "‘The Amazing Race’ prize is $1 million. How much of that do winners get to keep?."
