{"id":7814,"date":"2023-08-05T16:12:35","date_gmt":"2023-08-05T16:12:35","guid":{"rendered":"https:\/\/isafespend.com\/personal-finance\/taxes\/taylor-swift-says-thank-you-to-eras-tour-workers-by-handing-out-checks\/"},"modified":"2023-08-05T16:12:36","modified_gmt":"2023-08-05T16:12:36","slug":"taylor-swift-says-thank-you-to-eras-tour-workers-by-handing-out-checks","status":"publish","type":"post","link":"https:\/\/isafespend.com\/?p=7814","title":{"rendered":"Taylor Swift Says Thank You To Eras Tour Workers By Handing Out Checks"},"content":{"rendered":"
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By any measure, Taylor Swift’s Eras Tour is a success. It’s on tap to become the highest-grossing tour of all time, and a record number of fans\u2014myself included on behalf of my daughters\u2014logged on to Ticketmaster to buy tickets for the tour, resulting in the most tickets ever sold for an artist in one day.<\/p>\n

The tour, which began on March 17, 2023, in Glendale, Arizona, was set to wrap its U.S. leg in Inglewood, California, this week. That is, until Swift announced on social media that she’s adding another 15 North American stops, including dates in Miami, New Orleans, and Indianapolis.<\/p>\n

Each show on the tour spans over three hours, with a set list of more than 40 songs spanning what Swift called \u201ca journey through the musical eras of my career (past and present!).\u201d It includes selections from her albums: Lover, Fearless, evermore, reputation, Speak Now, Red, folklore, 1989,<\/em> and Midnights<\/em>.<\/p>\n

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The show has been widely praised.<\/p>\n

Rolling Stone<\/em> called it \u201cher best tour ever, by an absurd margin.\u201d<\/p>\n

The Atlantic<\/em> described the concert as \u201cunbelievable,\u201d adding, \u201cbut so was the fact that this one human woman planned to do it again the next night, and for many after.\u201d<\/p>\n

And my oldest daughter described it as \u201chonestly one of the best nights of my life,\u201d gushing, \u201cI would go back a million times.\u201d<\/p>\n

It’s not surprising, then, that some estimates suggest that the Eras Tour could eventually hit a record-breaking $1.4 billion when it ends in August 2024.<\/p>\n

Champagne Problems<\/h2>\n

The multi-award-winning entertainer clearly recognizes that she couldn’t have done it on her own. Swift reportedly gave bonuses totaling more than $55 million to those working on her show. That money was distributed to her dancers, riggers, sound technicians, catering\u2014and truckers. Multiple sources reported that Swift gave $100,000 bonuses to each of the 50 truck drivers of her tour before the Saturday night (July 29) show in Santa Clara, California\u2014those amounts alone total more than $5 million.<\/p>\n

Mike Scherkenbach, founder and CEO of Denver, Colorado-based Shomotion trucking company, has worked on several Swift tours. He referred to the money as \u201cunbelievable,\u201d \u201cgenerous,\u201d and \u201clife-changing.\u201d<\/p>\n

Scherkenbach noted that some of his drivers initially thought it was a joke\u2014most artists like Swift typically give drivers an extra $5,000 to $10,000. But, he said, in addition to the check, Swift included a handwritten note to each driver. They were also given a tax document.<\/p>\n

Call It What You Want<\/strong><\/h2>\n

Wait. A tax document?<\/p>\n

That’s right. Despite headlines touting Swift’s generosity as a \u201cgift\u201d\u2014it’s not a gift in the eyes of the IRS. It’s income. And as such, Swift’s team did the right thing by letting the recipients know there might be tax consequences.<\/p>\n

Long Story Short<\/h2>\n

For tax purposes, a gift is anything of value that is transferred \u201ceither directly or indirectly, where full consideration (measured in money or money’s worth) is not received in return.\u201d Tax professionals like me characterize gifts as those made with “detached and disinterested generosity\u201d\u2014in fairness, we got that description from Commissioner v. Duberstein<\/em>, 363 U.S. 278, 285 (1960).<\/p>\n

If it\u2019s a taxable gift, the donor would pay any gift tax due\u2014the recipient doesn’t pay gift tax. There\u2019s also no income tax payable because assets you receive as a gift typically aren’t taxable as income at the federal level. However, if the assets produce income, that income may be taxable.<\/p>\n

Hits Different<\/h2>\n

That definition matters\u2014not every transfer of money made with good intention is a gift. The IRS characterizes most \u201cgifts\u201d from employers to employees as compensation. That means the amount must be included in the employee’s income for tax purposes, and employers must withhold the proper amounts for income tax, Social Security, and Medicare. This is always the case for cash and cash-equivalent gifts, including gift cards and gift certificates, no matter the amount.<\/p>\n

Non-cash gifts may be treated differently. Small tokens are considered de minimis<\/em>\u2014that’s Latin for \u201cof minimal value\u201d\u2014and are not taxable. The IRS doesn’t put a dollar value on those but describes them as \u201cso small as to make accounting for it unreasonable or impractical.\u201d However, if you receive a non-cash gifts that are not de minimis<\/em>\u2014like a pricey trip\u2014you must report the value as taxable income.<\/p>\n

Tell Me Why<\/h2>\n

If you’re an employee, the value of any additional income that you receive should show up with the rest of your compensation on your Form W-2. If you\u2019re not an employee, but an independent contractor, the income would show up on Form 1099. Either way, it\u2019s taxable as compensation.<\/p>\n

Employees sometimes get a little anxious when talk turns to extra compensation\u2014especially if you use the \u201cb\u201d word. That\u2019s because there\u2019s a common misconception that bonuses are taxed at a different (read: higher) rate. It is true that the IRS may consider your bonus as \u201csupplemental wages\u201d for withholding purposes. That can affect how much money may be withheld from your check, but it doesn\u2019t change your tax rate. There\u2019s no separate tax rate for bonuses\u2014and the regular payroll tax rules for Social Security and Medicare still apply.<\/p>\n

Shake It Off<\/h2>\n

If you\u2019re an employee, your bonus will be treated at tax time as though it was regular compensation no matter what the withholding scheme looks like. Whether your employer withholds 22% or 28% on your bonus, if your effective tax rate is 25%, you’ll pay 25% on that income at tax time. If your employer withheld too much, you’ll get the difference back in the form of a tax refund. If your employer withheld too little, you’ll have to pay the difference.<\/p>\n

If you\u2019re an independent contractor, you\u2019re normally not subject to withholding. That means you\u2019ll report this additional income or payment incentive (independent contractors tend to avoid the \u201cb\u201d word) at tax time. Depending on the size of the payment, you may need to make\u2014or up\u2014your estimated tax payments to avoid a penalty.<\/p>\n

No matter whether it\u2019s subject to withholding or estimated payments, we know all too well that a bonus or payment incentive\u2014even if taxable\u2014still leaves you ahead at the end of the day.<\/p>\n

I Bet You Think About Me<\/h2>\n

As for Swift? Don\u2019t worry about her\u2014even if she is a reported $55 million down as a result of her generosity, she’s doing just fine. Before the tour, Swift’s combined income streams were estimated at $92 million, landing her at No. 9 on Forbes’ list of The World’s 10 Highest-Paid Entertainers. And with an estimated net worth of $740 million, she’s one of Forbes’ America’s Richest Self-Made Women.<\/p>\n<\/div>\n