Would You Turn Down Game Show Winnings Just Because Of The Taxes Involved?

All of your wildest dreams have come true, and there you are, on The Price Is Right, spinning that wheel, bidding your heart out and maybe, just maybe, winning it all in the Showcase. But with all that glory comes the cold hard tax facts — winners have to pay the government a portion of their haul, which can be a turnoff. One man who won the show last year held an “Ask Me Anything” thread on reddit (with his son’s help) and delved into the  cold hard reality of paying for playing.

Reddit user Rocky_Whore kicked things off: “My dad won The Price is Right last year. He’s sitting here and will be answering your questions through me (he’s not computer savvy). Ask him anything!” His dad won a trip to Washington, D.C., a washer and dryer, a new truck, an Apple computer and other goodies.

As expected, there were plenty of questions about how players get picked to compete, whether Drew Carey is nice and what it really feels like to spin the wheel. But then things got down to brass tacks when one user asked — what are the taxes owed on the prizes?

“I won $57,069 worth of items. I had to pay around $17,000 or $20,000 in taxes, but I’m not 100% on that, I tried not to pay attention.”

Nobody wants to pay attention to taxes, but because prizes are counted as income, there’s a tax burden there based on the value of the items. That can be kind of a sticky situation — even if you sell say, a new $40,000 car you won to be able to pay the taxes on it, its value drops immediately once it’s signed over to you. So understandably, reddit users wanted to know if winners had the option to just take cash — whether because you don’t like the prize or because it’s easier to set aside a portion of cash for taxes.

“Not really, but we won an apple computer and apple doesn’t ship their items so we got the money for it (we used that for taxes though). We also had the option to take money for the poker table because it was going to take a long time to ship.”

He added in another reply that they paid off the rest of the taxes not covered by the computer cash throughout the year, and that the family was fortunate enough that it all worked out.

“We were lucky it didn’t hurt us to pay them. Some people don’t accept their winnings because of the taxes.”

It might seem crazy to turn down a prize, but if it comes with strings attached, we can see how many people wouldn’t want to deal with the hassle of selling off prizes for less than retail value just to cover taxes. Later, he added another anecdote about a player’s aversion to taxes:

The paper work took maybe 2 hours to fill out because I won the showcase and they made me stay last. During that 2 hours he was talking to a guy that worked there. The guy was saying how quite a few people give up their prize because of the crazy taxes. One guy won a $10,000 cash prize and didn’t take it because he didn’t want to pay half to his ex wife.

Everything turned out well for this family — you can see how excited the man’s son is when his dad won the whole shebang — so if you can get on The Price Is Right and don’t mind paying taxes, get out there and try your best to win.

Heck, even Breaking Bad‘s Aaron Paul got his shot at the big haul (Warning: Jay Leno is involved in this clip):

I Won the Price Is Right, Ask Me Anything! [Reddit]


Edit Your Comment

  1. Coffee says:

    I had a teacher in high school who was on the game show Concentration, and one day, he showed us his episode. He absolutely mopped the floor with the woman he played against, getting all the matches and stealing all her prizes, then won the car at the end. It was the most thorough beatdown I’d ever seen. I was surprised to learn that he had to sell off all the prizes he’d won except the car – a little Volkswagen Rabbit – to pay off the taxes. Still…free car?

  2. YouDidWhatNow? says:

    Income is income, so yeah…you (or somebody) needs to pay the taxes on it. If Oprah wants to pay the taxes on the new car she just gave you, then fine…but if we didn’t charge taxes on prize winnings, people would come up with all kinds of creative ways to define all of their income as prizes.

    …and really, being on WoF is essentially gambling anyway. It just happens to be gambling on TV during prime time. And you pay taxes on gambling winnings too.

    I think it would be *nice* for such shows to just offer the cash equivalent for such prizes, which would of course make it a lot easier for the winners to pay their taxes…I might be miffed that I had to fork over $20k of my $50k winnings to the taxman, but hey…I still got a $30k windfall.

    • huadpe says:

      Game shows aren’t gambling because you don’t lose money if you don’t win the game, you just go home even (less travel costs).

      • YouDidWhatNow? says:

        Fair enough point, but the assertion is probably moot. I probably should have just stuck with “income is income.”

      • ReverendLoki says:

        Sure it’s gambling, it’s just that you’re gambling with your dignity. It just so happens that for some the dignity-to-USD exchange rate is very favorable to them.

        • YouDidWhatNow? says:

          [goes to gamble at dignity casino]

          [reaches into dignity pocket…]


          [asks for directions to nearest dignity ATM]

    • The Gray Adder says:

      But the sponsors donate the prizes. The network doesn’t go out and buy them. If everybody was allowed to just take cash, you couldn’t run game shows, period.

  3. Costner says:

    I won a contest online for a Blu-Ray player and 50 random Blu-Rays… they in turn sent a form to the IRS reporting the “winnings” and they valued the total package at something like $2200 which was full retail price on everything.

    At first I was sorry I accepted the prize because half the movies were crap (they sent me a Justin Bieber movie AND two different Twilight movies!), and the taxes were going to be $600. However I was later able to adjust the “winnings” based upon fair market value, so I used Amazon pricing for the Blu-Ray player so it was about half of what MSRP was, and I used a ballpark average price of $12 per Blu-Ray since some of them were newer releases, but most were older and/or crap that you could find in the bargain bin.

    My tax bill for that prize ended up being closer to $220, which I offset by selling some of the Blu-Rays – so in the end it worked out, but had I won a $30,000 car and had to pay taxes on the full value it might be a different story. In those cases the true market value of the vehicle could be thousands less than MSRP, and if you sell it the price is probably at least 20% under fair market value because it is a “used” vehicle. This is why you should only appear on Wheel of Fortune or Jeopardy where the bulk of the prize(s) are in cash… so at least you can pay the tax man without dipping into savings.

    • ConsumerA says:

      Good job! It ‘pays’ to be an educated tax payer. I won a 52″ LCD TV and some accessories valued at over $2000. I was able to report my winnings at closer to half that since they were valued using the previous year’s MSRP and the items were able to be bought elsewhere for much less.

    • HeadsOnPikes says:

      Still doesn’t compute. Say you have to sell the car at a 80% discount. Nobody’s tax burden is anything close to 80%. If you can’t afford to pay the taxes out of pocket, sell the car (albeit for less than MSRP) for a gain. If you can afford to pay the taxes, then you just got a car for the cost of the tax hit. It’s win-win on what is effectively found money.

      • HeadsOnPikes says:

        Corrected to say 20% discount obviously, selling it for 80% of value. The point is that selling the car for 80% of value is substantially more than the tax hit.

        • longdvsn says:

          Right…you can always still make a profit on the car – it’s just substantially less than you would hope. But good luck getting 80% of value. As soon as it’s signed to your name, it’s a used car. Just like driving off the lot, you lose 50% of value immediately.

          My brother won a car a few years ago valued at $75,000…tax bill of almost $25,000 on it. After checking with just about every dealer in the metro area, he was able to get $37,000 for it (it’s a high-end souped-up sports car in the middle of the recession…now ‘used’ – despite <100 miles on it) since he couldn't otherwise afford the taxes.

          Taxes are paid on the new value…not the used value he was able to sell it for.

          Total gain, a paltry $12,000, hours of effort to get it sold, and a whole lot of hassle…nothing anywhere near that $75k.

          • pittpanther says:

            Why is your brother paying an effective tax rate of 33%?

            • longdvsn says:

              About 25% Federal Income Tax, and about 8% State Income Tax (MN).

              Yes, he probably had some tax deductions…but not enough to substantially drop his tax liability. So yes, it was over 30%.

              They guy in the linked article estimated 17-20k in taxes on 57k in prizes (also about 30% tax rate).

              • longdvsn says:

                Also…that doesn’t mean his overall ‘effective tax rate’ was 33%. It was likely lower. But the amount over his normal salary had at least a 33% tax rate.

                Suppose, as an easy example, you make 35k/year (after tax deductions…to keep things simple). Your effective tax rate is a combination of the marginal tax brackets up to that amount. 10% on the first 8500, 15% on 8501 to 34500, 25% on 34501 to 35000.
                When you add 75k to your income all of a sudden, the added amount (above the 35k you normally make), is taxed at 25% (from 35000-83600) and 28% (from 83600-110000) by the federal gov’t leading to an effective tax rate of about 26%….then add in state tax too.

            • JEDIDIAH says:

              Perhaps he lives in one of those expensive coastal cities where you need a correspondingly high income just to pay the rent on your rat infested studio apartment.

              • longdvsn says:

                not at all…federal taxes will be at 25-28% on ‘income’ gained above a typical middle-income salary. State taxes can add another 8%.

                Again, like I’ve explained above, this doesn’t imply a total effective tax rate of 33%…just that the effective tax rate, on that prize – above his salary, was 33%.

            • JEDIDIAH says:

              What would your tax rate be if your income suddenly and magically jumped by $75,000?

              That’s the mathematics of the tax code. Your tax bracket goes up. Perhaps you even get hit with the AMT. If your tax rate goes up then not only do you get to pay taxes on your “prize” but you get to pay more taxes on all of your other income.

              Your own regular income effectively shrinks.

              • thefncrow says:

                That’s not in the least how our tax system works. There’s a reason that the US tax system is a marginal tax system.

                If your income suddenly jumps $75,000, you will enter a higher tax bracket, but only the additional income is taxed at the new higher rate.

                Imagine that we have a tax system where there are just two tax brackets, but which otherwise follows US tax law. The $0-$100,000 bracket is is 5% and $100,001+ bracket is 10%. You make $100,000 on the dot, except this year you got a $10 raise. That does not mean that your taxes go from $5,000 (5% of $100,000) to $10,001 (10% of $100,010). The actual way that would work is that your taxes would go from $5,000 (5% of $100,000) to $5,001 (5% of $100,000 + 10% of $10).

        • Costner says:

          I agree with you, but sometimes selling a car isn’t as easy as you might think. My father has a friend of his who won a econobox Chevy… I can’t recall the model at the moment, but it was the cheapest of the cheap. It came with zero options – no power windows, no power locks, and not even AC. Well technically it did have one option – some type of pre-wiring for AC if it was later to be installed, but aside from that it was the cheapest possible car and MSRP was right around $10k.

          He tried to sell that car for almost a year…dropping the price again and again. I think he eventually got around $5,000 for it. But during that time he had to insure it, he had to pay taxes on the full MSRP since that is what they reported, he had to put license plates on it and pay registration, and he had to deal with the hassles of trying to sell a used car.

          Was it still a “win” for him? Sure… he made a few grand in the end, but the result was nowhere near what someone might think when they hear about him winning a “new car”.

          I’m of the belief that all such winnings should be grossed-up for tax purposes. At least then people would end up feeling like they actually won something instead of focusing on the burden of being a “winner”.

  4. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    I don’t even enter contests unless the prizes are cash, or something small that I’d actually be able to afford the taxes.

    • HogwartsProfessor says:

      Me either, or SO small that there would BE no taxes. Or like food or something. I can eat the evidence. :)

      • lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

        That made me remember the raffle tickets my Dad and I bought on a whim the other weekend when I was driver #2 so he could have two vehicles at the local fire company car cruise/chicken roast. It’s a gun raffle, and there are 30 prizes: guns, ladders (I have no idea why they’re in there, unless it’s a fire company thing), money, and the last prize is a boar hunt.

        I can say, if I win anything, it will be the boar hunt. I just know it. And yes, I can eat the evidence in that case as well!

  5. MaytagRepairman is stealing socks while fixing your dryer. says:

    I’m guessing that for taxing purposes they win all of the prizes at full MSRP which is rarely paid at in a store.

  6. Dagny Taggart says:

    The question boils down to this: Is the resulting tax liability equal to or less than what the prize is worth to you? They give away a lot of stuff on the Price is Right that I would never want or use (really ugly furniture, musical instruments, windsurfing equipment, etc.) that probably isn’t even worth the trouble to sell.

    Not only that, a lot of their “suggested retail” prices are extremely inflated, especially on the vacations, and I would assume that is the amount they put on your 1099. In theory, you are allowed to claim a lower value on your tax return if you can prove that you could have obtained the same item for that price on your own, but doing that will flag your return, and do you really want the IRS to start a file on you?

    • spencer516 says:

      Well, funny you bring this up — I actually did this. I was on the Price is Right in 2005 and won just about everything you can (car, trip, spun a dollar on the wheel, etc).

      When it came to tax time, I received a 1099 for all my prizes which were value at $42,000. The trip alone was valued at nearly $10,000. Fortunately, I was aware of the ability to claim a lower value to a much more reasonable $3,000. Had I not known this, the amount I would have paid in taxes could have paid for the entire trip.

      In the end, I was able to refinance my “free” car to pay for my taxes (every car payment I made included “Free Car Payment!” in the memo field).

  7. evilpete says:

    Translated: You need to be well off to afford to win…

  8. Laura Northrup says:


  9. who? says:

    My brother’s college roommate won a game show (one of those horrid MTV game shows in the late 80’s). He won $10,000 in fabulous prizes, including a 12 ft sailboat. He kept a boom box and a set of cheap luggage, and sold everything else except for the sailboat. Nobody really wants a 12 ft sailboat, so they ended up leaving it leaning against the side of their rental house, like a corroded piece of yard art. He got enough from selling everything to pay the taxes and pay for $700 worth of car repairs.

    • Pants O Doom says:

      I have two questions.
      1. Who doesn’t want a sailboat?

      Yes, I know it’s basically a sunfish, but really.

      • ARP3 says:

        Agreed, those little boats are a lot of fun. I guess if you don’t live near a body of water, its a bit of a waste.

  10. DaveInBillsburg says:

    I’d have to think about that, it would depend on the prize. If it is cash then maybe since the tax won’t exceed the prize amount.

    It’s not like you can even offset the expenses necessary to win the prize like Olympic athletes can when they win medals or bonuses for winning. They can at least offset training expenses, travel expenses to attend the games, etc. Wonder if you had to travel to CA to try to get on TPiR, go on and won you could offset your taxes with those expenses? I’m sure a good tax accountant could find all the deductions though.

  11. The Great Aussie Evil says:

    This is why I miss The Big Spin. You’ll still get shafted by the Feds but at least the state doesn’t tax anything.

  12. Lethe says:

    I’m not exactly sure of all the hows and whys, but I know that here in Canada you don’t pay taxes on lottery or gambling prizes, and I’m pretty sure you don’t on game-show winnings either. On a related note, most luck-based contests are illegal unless there’s a skill-testing part, so to claim any prize for something you won (for example, a radio or restaurant contest) you need to answer a basic arithmetic question. It’s pretty stupid.

    • DoodlestheGreat says:

      I dunno. If you’re too stupid to answer a basic arithmetic question, you’re probably too stupid to deserve the prize in the first place.

      • Fafaflunkie Plays His World's Smallest Violin For You says:

        And in most cases, the pimply-faced cashier would just take the winning ticket and write the answer in anyway–just in case some pencil-pushing government knob wanted to make an issue out of the “skill-testing question” that circumvents that ancient law that only allows the government to provide “games of chance” even if the participants don’t have to spend money to play it.

  13. soj4life says:

    This is partly why if I win anything at work, I am just going to ebay it. I really don’t want to spend a couple hundred for something when I can just sell it to pay off one of my cc. Either new ipad or $25 less a month I have, that choice is too easy.

  14. Stickdude says:

    What’s the issue?

    Game show winners need to pay their fair share just like everyone else.

    If you win a game show, somebody along the line gave you some help. There was a great game show host somewhere in your life. Somebody helped to create this unbelievable game show that we have that allowed you to win. Somebody invested in cameras and scripts. If you win a game show — you didn’t win that. Somebody else made that happen.

    • Murph1908 says:


    • Coffee says:

      Well, one of the reasons, if you’ve read the comments here, is that they shows set the value of the prizes, so if they say that the backscratcher you won is worth $1,000, you’re suddenly paying $400 for the thing and can’t sell it.

      • WhyNotTry says:

        I was always under the impression that even if the MSRP is priced at something, you are still allowed at access your own fair market value for tax purposes. So, if that tractor is only really worth 400, you only have to pay taxes on the 400

    • who? says:

      What’s your “fair share?” The fabulous prizes are given to the game shows for free in exchange for being promoted on the show. The tax is assessed on the full retail value of the prize, which is usually wildly inflated. Add to that the fact that nobody in their right mind would want most of the fabulous prizes, and the winners end up with a pile of crap that is often not worth enough to even pay the taxes.

      So, basically, you’re going on TV, making a bunch of money for the TV producers, and giving yourself a big headache at tax time. That’s the big deal.

      • SmokeyBacon says:

        Wait, is that accurate – the prizes are totally free? I assumed they were deeply, deeply discounted but that (at least for larger items) they had to pay something. It still sounds like a good deal for the gamshows – one person declines they can just reuse it (it makes me think of things like rebates and gift cards and how the benefit the store because the consumer either forgets they have them, doesn’t fill it out right, etc).

      • Stickdude says:

        Enter text…

    • Patriot says:

      If you’re posting that on consumerist.com, you didn’t do that. Al Gore had to invent the internet and somebody else taught you how to type.

    • ARP3 says:

      To draw a more complete- if you didn’t have the FCC to regulate TV frequencies and the FTC to prevent you from being ripped off on contests and game shows, then you wouldn’t have much of a game show. So, somebody else made that (“that” being the FTC and FCC) happen. Fox News always seems to edit out the statements about roads, bridges, infrastructure, etc. being the “that.”

      • MarkFL says:

        Also, Al Gore didn’t say invented the Internet. He had help. Somewhere along the way there was someone who invented the computer. Someone built the incredible ARPANET that eventually turned into the Internet. Somebody cosponsored the Information Infrastructure and Technology Act of 1992. That wasn’t Al Gore. That was somebody else.

        Oh, wait, that last one was Al Gore. But he still never said he invented the Internet.

  15. Murph1908 says:

    Saw someone win 2 watches with a total worth of about 3000.

    I wouldn’t have paid the close to $1000 in taxes for those.

    My wife works with someone who won a ‘Trip with the Ravens’ contest. The value they set for that prize was so outrageous, the taxes they paid on it wasn’t worth the experience. It ended up costing her close to $2000 or something for a flight, hotel, and crap tickets. The ‘fly with the Ravens’ experience was worthless, as the charter plane had the winners separated from the players. Didn’t even get to interact at all with them.

    • ConsumerA says:

      If you come across any winning lottery tickets that you don’t want, I’d be glad to take them off your hands.

      • Murph1908 says:

        Where did I imply I wouldn’t like a cash prize?

        I wouldn’t want 2 $1500 watches, because I wouldn’t want to pay the taxes on them. Someone I know didn’t think $2000 was well spent on a flight from Baltimore to Cleveland, hotel room, and crap tickets.

  16. DoodlestheGreat says:

    If it was a straight cash prize, I’d take it because giving up the taxes would be relatively simpler than if it was a physical prize. For physical prizes, it would be a judgement call. I’d have to balance interest in the prize vs. ability to cover costs. If it was something I’d really like & can afford to pay the taxes on, or if it was something I could sell easily and still make an acceptable profit on, I’d take it. Otherwise I’d just ask for the year’s supply of Rice-a-Roni. (The San Francisco treat!)

  17. sparc says:

    depends on what you win. If the prize is sizeable and i can’t use or sell it, then it would make sense to decline it.

  18. centurion says:

    My wife went to a taping of the Martha Stewart show. Martha gave away a new GE washer and dryer. My wife won. After the taping of the show was over, my wife was very nicely escorted a block away to a lawyer’s office. At the lawyers office she had to fill out release forms and a 1099 tax form. Getting the appliances was another story.

    • who? says:

      I thought about that every time I watched Oprah give the entire audience some expensive car or something.

      • longdvsn says:

        Oprah has always given cash WITH the prize to help offset tax liabilities (well, at least in more recent years with her giant giveaways)

  19. SmokeyBacon says:

    I think about this stuff every time I hear my friends talking about winning that dream home give away and stuff like that – I think that it is crazy to even enter because the taxes will be so high and the items aren’t going to be worth as much when you try to resell them (even if they are brand new and unopened) so you end up getting screwed by the taxes (I think I read somewhere that happens a lot with those home give aways). If it were only a cash prize I would be ok with keeping it (because I could use a portion of the cash to pay the taxes) but with merchandise that would be very difficult for a lot of people. In the example above – if that were me I would have had a bunch of stuff I don’t need and would have to try and sell to pay taxes that amount to half my gross salary – that just seems stupid to me (and for them obviously they could afford it). But since most of the time the value of the prizes is counted at retail price (per the manufacturer I am guessing – so probably higher then you could get it for at a store during a sale if you actually need it) and you can’t get that as cash value, I would have to pass (at that point I honestly wouldn’t even bother trying to play) – it is strictly the cash prize shows for me.

  20. damageddude says:

    Back in 1984/85, I stuck a radio station’s bumper sticker on the back of my mother’s old Ford. If it was spotted by the station you would be entered into a contest where the ultimate prize was a Z28 and $5k cash in the glove compartment. Long story short, my mother was spotted, she was entered into the contest and she won the car.

    The combined value of the car and cash, which helped pay the taxes, bumped my parents into the next tax bracket. So my dad ended up with a new Caprice (which he traded the Z28 for), my mother got his 2 year old LeSabre and I didn’t even get the Ford as my parents sold it to help pay the tax bill.

    • SeanMacATL says:

      *bumped the portion of their income above the cutoff to the next tax bracket.

      When you make enough money to enter the next tax bracket, you’re still paying the same amount of taxes in the lower bracket(s). That’s why continuing tax breaks for the first $250,000 in income is still a tax break for EVERYONE. Even if you make more than $250k, you’ll still be taxed less on that first $250k.

  21. cybrczch says:

    I was on a game show in the 1980s, when I was a poor college boy. I bought a cheap plane ticket to fly out to California, stayed at a roach motel a few blocks from the studio, walked to the studio and back for the taping, then flew home the day after taping.
    This was Wheel of Fortune back in the 80s, so you had to buy from the big revolving carousel of prizes (man, I wanted that ceramic dalmation so bad…). I made enough on one puzzle to buy a car, a ‘portable’ TV, a VCR, and some other assorted goods. On the final showcase I won a men’s bracelet (actually the equivalent price in a gift certificate to the jeweler).
    I paid the sales tax (loan from Mom) to get everything. At the end of the year, I had to pay federal income tax, but managed to make up a little of the cost by getting a refund from both my home state and California state tax.
    The car was provided by a local dealer. I asked how much they’d buy it for, they quoted me about half the actual cost, saying ‘with all the options included we would have a hard time selling it.’ Yeah, right. I put an ad in the paper, when I got an offer I explained how I was getting the car and why I was selling it (I was a poor college student), and sold it for nearly all the asking price. I actually got to drive it 3 miles, from the car dealer’s lot to where I handed it off to the buyer. Paid Mom back, the rest went into the bank where it helped pay off my student loans.
    As a bonus, while we were taping, the news show “20/20” was taping a feature segment on WoF (this is back when it was becoming a phenomenon), so I ended up on two national TV shows.

    • Dagny Taggart says:

      LOL When the article mentioned worthless prizes, I immediately thought of the ceramic dogs they used to have on Wheel. Back then, you were forced to “shop” with the money you won. I saw more than one sap who solved the puzzle after winning only a few hundred dollars being forced to buy the ceramic dalmatian.

  22. mattyb says:

    When I read the fine print I see that some contests offer the winners cash to pay the taxes along with the prize. Those are nice, but few and far between.

    • There's room to move as a fry cook says:

      I don’t see how that would work. The money they use to pay your taxes would also be considered income to you. If you won a $100,000 prize and they paid your $30,000 tax bill then you would owe taxes on $130,000.

      • kosmo @ The Soap Boxers says:


        X = Z*(X+Y)

        X = Tax liability
        Y = “Official” prize amount
        Z = Tax rate

        Say that you win $100,000 and have an effective tax rate of 25%.
        X = .25(100,000 + X)
        X = 25,000 + .25X
        .75X = 25,000
        X = $33.333.33

        Give the winner $133,333.33 (100K prize + 33,333.33), they pay a tax bill of $33,333.33 and walk away with $100,000.

        • thefncrow says:

          It is possible, but this formula doesn’t work for figuring that number. What you’ve forgotten is that the $33,333.33 that you have to give them for taxes is, itself, taxed.

  23. kathygnome says:

    The big issue here is that while game shows may be great entertainment, most people don’t need or even want a large portion of the junk they giveaway, so they resent paying taxes on it.

  24. lyontaymer30 says:

    If I come out with more than I lost, then yes. As long as I gain, I’d deal with ti.

  25. PragmaticGuy says:

    Years ago I had a tax client, a 19 year old girl, who won $100,000 and a Corvette from a radio station give away. She ended up selling the Corvette for $19,000 and it was valued at about $27,000 and owed around $70,000 in taxes between the IRS and NYS/NYC. She ended up using the rest to pay for her college education.

    • StarKillerX says:

      $70k in taxes on $119,000 worth of prizes?

      HOLY HELL!

      Remind me not to let you do my taxes!

  26. tungstencoil says:

    This makes me think of a program at an old job that my group managed. It basically allowed reps to earn points for desirable actions (e.g. stop a customer from cancelling, earn some points). Points were then exchanged for merchandise, a la credit card point programs minus the credit card.

    First hurdle was taxes: reps don’t make a ton of $$, so many couldn’t afford taxes on their prizes. So we modified things such that when a rep claimed a prize, we grossed up their paycheck in order to offset the prize value.

    Second hurdle: timing. The nature of payroll at a Fortune 50 company being what it is, sometimes the tax burden and gross-up would not occur on the same period (but were 99.99% likely to occur one before/after). Sometimes, the burden would come first, sometimes the gross-up. This still caused a complaint. Most burdens were in the low to mid double-digits; not a ton of money, and even paycheck-to-paycheck one would assume they could float $20 until next pay period.

    But the biggest complaint? People who got the gross-up before the burden. One woman literally saved all of her points all year, and used them for Christmas shopping (it was a very generous program if you did well). She got like $700 gross-up, spent it without blinking, and then wondered why her next paycheck was only like $30. I felt bad for her on a personal level, but this wasn’t even her first round of redeeming points, there was training, all kinds of stuff, and ZOMG-YOUR-PAYCHECK-WAS-DOUBLE-WHAT-WERE-YOU-THINKING?!?!?!

  27. There's room to move as a fry cook says:

    No “income is income” or taxes on winnings in Canada. Lottery winnings are tax free. I won a Disney World vacation in a supermarket giveaway and had no tax forms to fill out and I know others who have won major prizes in Canada with no tax obligations.

  28. frodolives35 says:

    This is nothing new. In 1984 a friend of mine was on Wheel. This was back when you had to spend your winnings on the prizes. He only took about half of the prizes he won because they were such poor quality that the inflated price drove the taxes so high it was not worth it. He did keep the Dalmatian though it set in the corner with sun glasses and a party hat on it for years.

  29. Elyahia says:

    Right – and it doesn’t keep spiraling. Once they pay the tax offset, there’s no tax on that payment (or it would basically go on forever). This is called “grossing up” – covered in this IRS publication


  30. Cacao says:

    So one time I contributed to my local NPR station and it was a large enough contribution that I got a cookbook as a prize. My employer also matched charitable contributions. But when I got the notification of my employer’s fundmatch, it was my contribution minus the retail cost of the book. That threw me for a loop.

    • kosmo @ The Soap Boxers says:

      That’s also the amount you can claim as a deduction on your taxes. Charitable contributions must be reduced by the value of any goods/services received.

  31. Fafaflunkie Plays His World's Smallest Violin For You says:

    Another reason to say this: Hurrah for me living in Canada! Suppose there were a Canadian version of The Price is Right. I won a bunch of prizes. Guess how much I’d pay in taxes on them? ZERO! Prize winnings (lotteries, sweepstakes, gambling, game shows etc.) is considered a windfall, not income in Canada, and therefore 100% tax free–Howie Mandel was eager to point out on the Canadian version of Deal Or No Deal that fact.

    Sure, putting the cash you won into a bank/mutual fund etc. would turn the capital gain into income, but only that gain, not the initial prize.

    • NoWhammies10 says:

      Shame our Canadian shows have no budget. [i]Definition[/i], anyone?

      • NoWhammies10 says:

        My kingdom for an edit button. Frakking HTML tags! Definition is how it should read.

      • Fafaflunkie Plays His World's Smallest Violin For You says:

        But hey, didn’t you yearn to watch a 5-time winner win the grand prize? A whole week’s rental of a Chevy Chevette courtesy of Tilden Rent-A-Car? How I still remember that remains a mystery to me. But at least we learned something: that show really sucked. How it survived so many years, other than to fill CTV’s Canadian content obligations, is beyond me.

        For you Americans who need to know, GIYF: http://en.wikipedia.org/wiki/Definition_(TV_series)

  32. Stiv says:

    Thanks for the Aaron Paul clip. That was awesome.

  33. Press1forDialTone says:

    One word to answer the title of the post: NO.
    Oh, IMHO, Breaking Bad sucks.
    I am concerned that Aaron might be another Charlie Sheen in the making.

  34. PeriMedic says:

    I’ve been on 2 game shows: Crosswits in 1978 and Win Ben Stein’s Money in 1999. Didn’t win really big. Didn’t turn it down, either :)

  35. Alex d'Indiana says:

    I don’t know if I’d turn down stuff – it depends on what it is and how much the tax is. I suppose you’d just have to consider whether you’d want to buy whatever thing it was at a discounted price.

    But I wouldn’t turn down cash. A percentage of that gets taken away, sure, but you still end up on top. That’s something that the people complaining about Olympic athletes getting charged income tax on their honoraria didn’t seem to get.

    And the guy who didn’t want his ex to get some of the money was just being spiteful (maybe he’s justified, what do I know), but that really has nothing to do with taxation.

  36. samoq says:

    I did. I was on Jeopardy about 12 yrs ago and came in second, the prize for which was a trip to Barbados. I had just moved across the country and changed jobs, so I never claimed the prize because I didn’t want to pay the taxes on it. Hell, just going to CA and being on the show was enough fun for me, and I’m not a beach person anyway.

    • mulch says:

      Everybody who sweepstakes has turned down a prize at some time or the other. I turned down a really big boat, because I have no place to store it and no one is buying them nowadays. Taught me to be more selective in my entries.
      I’m thinking I should be living on it now…

  37. Taija says:

    10 years ago or so, my dad (and his co-workers who were in his team) won a car from the Finnish version of Family Feud. I should ask him how much exactly he had to pay in taxes; must’ve been a lot. We really needed a new car then, though, so despite the taxes it still should be cheaper than buying one.

    As for me, I would only turn down a prize if it was something I really don’t need, like a big boat. I guess I could sell it, but I’d still have to gather enough money for the taxes and all the work and hassle would probably not be worth it.