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Taylor Swift’s Eras Tour is set to become the highest-grossing tour of all time. Swift has added 15 North American stops to the tour, extending its duration. The show, spanning over three hours and featuring a set list of more than 40 songs, has received widespread acclaim. Swift has reportedly given bonuses totaling over $55 million to the crew working on her tour, including $100,000 bonuses to each of the 50 truck drivers. While these bonuses are seen as generous, they are considered taxable income by the IRS. Kelly Phillips Erb reported
Glendale, Arizona – March 17: Taylor Swift took the stage for the opening night of her highly anticipated “Taylor Swift | The Eras Tour” at State Farm Stadium on March 17, 2023, in Glendale, Arizona. The city of Glendale even ceremonially changed its name to Swift City for the duration of March 17-18 to honor the tour. The Eras Tour has already proven to be a massive success, poised to become the highest-grossing tour of all time. Fans from all over flocked to Ticketmaster to secure their tickets, resulting in record-breaking sales for a single day. The tour, which kicked off on March 17, was originally scheduled to conclude in Inglewood, California, this week. However, Taylor Swift surprised her fans by announcing additional North American stops, including Miami, New Orleans, and Indianapolis. Each show on the tour is an epic three-hour spectacle, featuring over 40 songs that span Swift’s entire musical career. The setlist includes hits from her albums such as Lover, Fearless, evermore, reputation, Speak Now, Red, folklore, 1989, and Midnights. Critics have showered the tour with praise, with Rolling Stone declaring it as her best tour ever and The Atlantic describing it as unbelievable. Fans have also expressed their awe and delight, with one fan calling it the best night of their life. With such overwhelming success, it’s no wonder that predictions suggest the Eras Tour could reach an unprecedented $1.4 billion by its conclusion in August 2024. The success of the tour would not have been possible without the hard work and dedication of Taylor Swift’s team. Swift reportedly shared her success by distributing over $55 million in bonuses to everyone involved in the tour, including dancers, technicians, and even truckers. In fact, each of the 50 truck drivers received a generous $100,000 bonus before the Santa Clara show in California. The total sum of these bonuses alone amounted to over $5 million. This unexpected windfall left many drivers in disbelief, as they were accustomed to receiving much smaller amounts from other artists. Alongside the bonus, Swift personally penned a heartfelt note to each driver and provided them with the necessary tax documents. It’s important to note that while the bonuses were initially perceived as gifts, they are, in fact, considered income in the eyes of the IRS. Swift’s team was responsible for informing the recipients of any potential tax implications. In terms of taxation, a gift is defined as the transfer of something valuable without receiving full consideration in return. Typically, the donor is responsible for paying any applicable gift taxes, and the recipient does not owe any gift tax. Assets received as gifts are generally not subject to federal income tax, except for any income generated by those assets. However, not all transfers of money made with good intentions qualify as gifts. When it comes to employers giving gifts to employees, the IRS classifies them as compensation. Therefore, the value of the gift must be included in the employee’s income for taxation purposes, and appropriate withholdings for income tax, Social Security, and Medicare must be made. Cash gifts and cash equivalents, such as gift cards and certificates, are always subject to taxation, regardless of the amount. Non-cash gifts may be treated differently, with small tokens considered de minimis and not taxable. The IRS does not specify a specific dollar value for de minimis gifts but defines them as too small to warrant accounting. However, if a non-cash gift exceeds the de minimis threshold, such as an expensive trip, its value must be reported as taxable income. For employees, the value of any additional income, including bonuses, should be included on their Form W-2. Independent contractors, on the other hand, will report such income on Form 1099. Regardless of the withholding scheme, bonuses are treated as regular compensation for tax purposes. While the amount withheld from a bonus may differ, it does not affect the tax rate. The regular payroll tax rules for Social Security and Medicare still apply. If an employee’s bonus exceeds the amount withheld, they will receive the excess as a tax refund. Conversely, if the bonus was under-withheld, the employee will need to pay the difference. Independent contractors are not subject to withholding, so they must report the additional income at tax time. Depending on the payment’s size, they may need to make estimated tax payments to avoid penalties. Despite the potential tax consequences, receiving a bonus or payment incentive, even if taxable, is still financially beneficial. As for Taylor Swift, her reported $55 million in bonuses given out do not pose a threat to her financial well-being. With an estimated net worth of $740 million and a combined income of $92 million before the tour, she is comfortably ranked among Forbes’ America’s Richest Self-Made Women..
