The Price is Right contestants who are lucky enough to win a car on the show will have to pay state and federal taxes to claim their prize.
Contestants have been walking away with a myriad of impressive prizes from The Price Is Right for more than 50 years now.
And even though many contestants dream of walking away with a brand new car, the reality is that this car will come with some state and federal tax-related strings.
About The Price Is Right prizes
CBS’s The Price Is Right has been calling lucky contestants to “Come on down!” since 1956 and has now become the longest-running game show in the United States.
For the duration of The Price Is Right’s more than 50 season-run, the show has doled out millions of prizes ranging from boats and special trips, to furniture sets, kayaks, refrigerators and so much more to its thrilled winners.
It has also remained one of the most popular game shows on American television.
How it works when you win a car on The Price Is Right
The Price Is Right has certainly never been stingy when it comes to the prizes at stake, but somehow the “brand new car” has always been a fan-favorite prize among both contestants and viewers of the show.
After all, who could forget when Therese Cook walked away with a brand new Ferrari 458 Spider (with an estimated worth of $285,716, which would make it the most expensive prize ever won on The Price Is Right) in 2013.
But it turns out that winning a car on The Price Is Right like most other things on this game show, is not as simple as it seems when you are watching from your couch.
Debra Field – a The Price Is Right contestant who actually managed to win a new car on the show, explained the process in a bit more detail.
According to Field, contestants get to view all of their prizes after the filming of the episode, at which point they have to sign a letter agreeing to pay California income tax on the prizes before they can claim them.
Later on, the show’s accountant sends through a statement with the amount that is owed, which will need to be paid before any of the prizes can be collected.
The reality is that game show winnings, like new cars, are considered an additional income. And therefore, contestants have to pay federal and state taxes on the cars that they win.
The exact amount that contestant have to pay is determined by the state in which they won (for The Price is Right, this is usually California or New York) and the full retail value of the car.
The same is true for other The Price Is Right prizes
Cars are not the only The Price Is Right prizes that fall under this rule. Michael Richards, one of The Price Is Right producers, revealed in a 2015 interview that the letter which the show sends to its winners after their episode has been filmed includes a “tax letter.”
This letter details all of the individual prizes, their value, and the taxes that will need to be paid by check before any of the prizes can be collected.
The Price Is Right contestants also have to pay federal tax
Unfortunately, the taxes that The Price Is Right winners have to pay before they can enjoy their winnings do not stop at the state level.
Winners who walk away with prizes that are valued at more than $600 are also liable to pay federal taxes on their earnings in the United States.
Tax professionals have also warned that winning these big prizes can often bump winners into a higher tax bracket overall, which means that winners will end up paying much more in taxes than they are used to paying.
What happens when contestants cannot pay these taxes?
There is no doubt that receiving the tax bill following your big win will likely put a damper on just about any The Price Is Right winning streak.
But some previous contestants have proven that their intelligence stretches beyond simply guessing the correct price.
The Price Is Right contestants are under no obligation to take all of the prizes that they have won on the show, and several previous winners have detailed why they chose to take some prizes and leave others, to ensure that they could pay the taxes and collect their winnings.
Some contestants have even been able to exchange some of their prizes for cash, and though this income will still be taxed, it is often much easier to deal with.