We all dream of winning big on a TV game show. But the reality is more “show” than “game.” Here's how it really goes down.
Winning your favorite game show ain't all it's cracked up to be.
Jeopardy, Wheel of Fortune—heck, even Family Feud—all feel like tickets to prosperity when you're watching from home. And the winnings are real. It's just that those winnings come with some pretty hefty strings attached.
We're not saying you should feel sorry for the lady who just won a Caribbean vacation with the spin of a wheel and some lucky guesswork. But before you quit school to travel the game show circuit, there are a few things you should know about the nitty gritty details behind the pageantry.
Here's more from a woman who has been there, done that, and paid the taxes.
Aurora De Lucia, a TV editor and blogger in New York City, appeared on The Price Is Right in 2013.
Here's what she learned from that not-quite life-changing experience, and what you have to expect if you plan to follow in her footsteps.
So, What All Did She Win?
De Lucia was pretty successful during her The Price Is Right appearance. She was well-prepared. As an avid fan, she had years of experience with the show. She even knew to check the prices on Goldbond Medicated Powder before taping.
And, unlike some contestants, she had zero qualms about using the handy "bet $1 more than the last contestant" strategy.
The result was that De Lucia won a bit of cash ($96, to be exact), a pair of fancy 3D camcorders, and—the big prize—a brand new Chevy Cruze LS sedan.
The Downside of Game-Show Winnings, in a Word
It all boils down to one thing: taxes.
Actually, to be fair, there are a few other drawbacks — which we'll get to — but the biggest drag about free stuff from game shows is that it's taxed as earnings. That is, you have to pay taxes on your winnings just like you do on your paycheck.
The Gift That Keeps On Taking
So, when you win a game show, you get taxed on the cash value of your prizes as if they were income. But you don't have an option to take cash instead of the prize itself. If you want to liquidate a refrigerator you don't need or a jet ski you'll never use, you have to do it the old-fashioned way: by selling it.
And before you can even take ownership, you have to agree to pay the taxes. In De Lucia's case, that turned out to be a serious burden.
Doing the Math
The total cash value of her prizes was $21,008, as De Lucia writes on her blog.
With federal, state, and sales taxes all stacked on top of each other, that tax bill came to nearly $9,000.
She had to pay the $2,067 sales tax out of her pocket before she could even pick up the car.
Congratulations, You've Won a Lifetime Supply of Red Tape
If we made it seem simple to pay your taxes and claim your prizes, we misrepresented the truth. In fact, there are lots of bureaucratic hurdles to leap through, and they start the instant the cameras stop rolling.
Andrea Schwartz is another The Price Is Right winner. She talked to the A.V. Club in 2013 about her experience.
"Yeah, you don’t just drive off the back lot with the car like I thought the entire time I was growing up," Schwartz explained. "After the show, you fill out some paperwork and basically sign your life away. You say that you’re going to pay the taxes on it.”
Some of those taxes are due before you take possession of the prize. Others get added to your regular tax bill.
"If you win in California, you have to actually pay the California state income tax ahead of time,” Schwartz said. “Then they give the okay to the dealers and to the vendors that are supplying the prizes. Then you deal with those people."
Come and Get It...If You Can
Even taking possession of your prizes can be a bit of a pain. Take the cars that Schwartz and De Lucia won. The show finds a local dealership to hand the vehicle over to you. But the word "local" is defined pretty loosely in this case.
Dealerships can be up to 150 miles away from your home. To make matters worse, the show gives you a 90-day window in which the dealership might have your car ready. But when you get the call, you only have 10 days to pick up your winnings.
Not everyone can drop everything to travel 150 miles within 10 days. And if you don't make the deadline, you forfeit your prize.
Between the travel and the taxes, it's easy to imagine situations in which a winner is better off saying "no thanks" and leaving the studio empty-handed, but no worse off than they were the day before.
Claiming the Other Prizes
So, picking up your new car can be a hardship. Unfortunately, so can receiving your other, smaller prizes.
Some dealers make the recipient pay the shipping cost. Imagine what that's like for a large prize, like a pool table or an electric bicycle.
And What About the Vacation Packages?
At least you can sell your physical prizes. If you should win a trip to the Bahamas, your tickets and hotel stays are non-transferable.
Can't take off work in time to enjoy your free vacation? That's too bad. You'll just have to forfeit.
If you are able to take the trip, don't forget that you'll still have to pay taxes on the cash value. Since some of these trips are worth thousands of dollars, that can end up being a pretty penny. These vacations aren't quite "free" after all. In fact, nothing you win on a game show is.
What De Lucia Did With Her Prizes
As you'll recall, De Lucia only won $96 in cash on "The Price is Right." She was, of course, taxed on that.
But she was able to sell the car to a family member. She pocketed a little cash on that.
Selling her 3D cameras proved much more difficult. No one seemed to want them. After trying unsuccessfully to make some money back on the prizes, De Lucia gave up and donated them to a charity that helps people heal from trauma through artistic projects. At least they went to a good cause.
What Schwartz Did With Her Prizes
Schwartz had a little more to work with than De Lucia. She sold her shuffleboard and pool tables for a combined total of $4,500 (she was taxed on $14,000 for the tables).
She sold the prize Mazda 3 for $13,000. Once all the taxes were paid, she had a little money left over. She used it to start a food truck business called The Souper Wagon.
So Was It All Worth It?
Both The Price Is Right contestants say that they enjoyed their time on the show. And they'd both do it again in a heartbeat. They'd just be a little less prone to sticker shock during the marathon legal paper-signing session that follows each taping.
"I'm very happy and extremely thankful for my day on The Price Is Right," De Lucia wrote. "But I’ll never stop thinking it’s funny that people trivialize a tax bill of $9,000ish as though it’s totally nothing (and that everyone could still easily keep this new car) – just because it’s a bill from something fun as opposed to traditional income."
For those who don't see the potential downfall of an unexpected and enormous tax bill, De Lucia has some sage advice.
"If you have nine grand to drop on a car," she wrote, "Go out and buy yourself a car!"