Joe and Zora Millionaire? Not for long

After Uncle Sam gets his chunk, they'll be in middle class again

By Russ Wiles / The Arizona Republic

March 10, 2003

Joe Millionaire, meet Uncle Sam. For all those unlucky gals who got dumped in recent weeks by Joe Millionaire, here's a consolation prize: Joe will be back in the middle class before you know it.

The recent finale of the hit reality TV show included a surprise payment of $1 million by the Fox network to Joe, also known as Evan Marriott, and his new girlfriend, Zora Andrich. But the couple face a costly date with the tax man that will slice their windfall by about half.

Stanley Reynolds, a certified financial planner in Phoenix, wondered how much Evan and Zora would keep of the $1 million prize they split, so he fired up his professional tax software for answers.

Evan's taxable income is more than simply his $500,000 share plus $19,000 from his construction job. He also has to account for all that free European travel, entertainment, food and lodging as a taxable benefit, Reynolds said.

"I assumed a value of $10,000 for a month flying around France, and I'm probably being generously low for tax purposes," Reynolds said.

But we'll call it $529,000, and send Evan on his way looking for deductions.

Most likely, he won't find many.

"From the depictions on the show, he almost surely does not itemize but instead takes the standard deduction of $4,700," Reynolds said. Evan will be in for a surprise when he learns he can't take his normal $3,000 personal exemption since it phases out below his new income.

At this point, Evan's federal tax bill is $179,000, said Reynolds, who used 2002 tax rates under the assumption Evan got paid late in 2002, when the last segment was taped.

And Evan's been working in California, so he could face $47,000 in taxes there.

Evan may have done some tax planning to ease the bite. Reynolds assumed he might have plunked $3,000 into an Individual Retirement Account and donated $50,000 to charity. Those moves would have saved some dough. But after subtracting taxes, and taking into account tax benefits from the charitable donation and the IRA investment, Evan would have only about $239,000 in spending money from the original half million, assuming he stayed in California.

Zora won't fare much better. She faces taxes on her $500,000, taxes on all her free travel and taxes on the three gem necklaces and the diamond ring that Evan (and Fox) handed out.

Reynolds conservatively estimates the value of the jewelry at $15,000. He also figures Zora might have grossed $18,000 in her job as a substitute teacher. If she, too, gave $50,000 to charity and put $3,000 into an IRA, the spendable portion of her half-million would be whittled to $246,000, Reynolds said, assuming she stayed in New Jersey, where tax rates are higher than in Arizona but lower than in California.

It's a good thing Evan and Zora didn't get married last year. Filing as a couple rather than two singles would have triggered a "marriage penalty" tax bite in the neighborhood of $20,000 or more, depending on which state they settled in and whether they made tax-saving moves, like investing in IRAs and giving to charity.

In a nutshell: Evan and Zora will be richer for the "Joe Millionaire" experience, but not to the tune of seven digits.

The tax bite will bring this fairy tale down to Earth.

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