“You’ve just won a brand-new car!”

Fans of “The Price is Right” know the thrill of hearing those words from the iconic host Bob Barker. The excitement is palpable, the lights flash, and the winner’s smile could light up the stage. But what happens after the cameras stop rolling? Do the lucky winners get to drive their new car straight off the lot and into the sunset? Well, not exactly.

The reality of winning a new car on a game show

Watching someone win a car on a game show is certainly a spectacle. Laying on the couch while I was home sick from school (snacking on Saltines and sipping Sprite…what’s up, nineties kids!), it was great internally cheering as contestants won big. But behind all that excitement lies a complex process that most viewers don’t see. After the congratulatory hugs and the confetti settles, the real work begins: first, dealing with taxes.

Unfortunately, the car you win on stage doesn’t come free and clear. In fact, you can’t even drive it off the set. Instead, as detailed by App.com, there’s a bunch of paperwork to be done. Winners receive a letter from the show’s accounting department outlining the taxes they owe on their new car. Once those taxes are paid, the car is delivered to a local dealership, where the winner can finally pick it up.

Is it worth taking non-cash prizes?

Winning a car or vacation sounds fantastic until you realize that all game show prizes are taxable. According to NerdWallet, if the combined value of your winnings exceeds $600, the game show will send you a 1099-MISC form, which you must file with your tax return. This can be a bit of a downer, as the value of your prize is added to your annual taxable income. For some, this might push them into a higher tax bracket, meaning a larger tax bill come April.

This reality can make accepting non-cash prizes tricky. Sure, it’s exhilarating to win a car or a tropical vacation, but unless you have enough money set aside to cover the taxes, you could find yourself in a financial bind.

Should you take the cash instead?

So, what do you do if you win a car but can’t afford the taxes? Luckily, you have options. Some winners choose to take the cash value of their prize instead of the actual item. While it might sound less glamorous, this approach can be a smart financial move.

Taking the cash allows you to pay the taxes and still have money left over. You might decide to buy a less expensive car, or perhaps a used one, and pocket the difference. If you’ve won a vacation, you could use the cash to pay for a more budget-friendly trip.

Editor’s note: This article was originally published on January 7, 2024, and was updated on August 9, 2024.