Getting the call to “Come on down!,” the long-running TV game show “The Price is Right” is the stuff dreams are made of.
It certainly was a dream moment for Andrea Schwartz, of Reno, Nev., when she got the call while sitting in the audience of a show that aired in April of last year. Schwartz’s dream became even more exciting when she won the iconic game show’s final round known as the, “Showcase Showdown.”
Schwartz says that excitement soon gave way to frustration when she says she realized that, in addition to being responsible for local and federal tax, California law required her to pay state income taxes on her $33,000 prize before she could even claim her winnings.
“I remember having an image of myself walking away in my convertible with a stack of cash in my hand,” Schwartz said. “They take you to a back area and it’s like a small warehouse. You sit in line and you wait for everyone to sign their life away.”
But experts say the IRS considers prizes and giveaways taxable income for television contestants and guests who want to go home with their winnings.
“They may claim surprise when they win because they never expected to win but the fact is it is taxable and they’re usually told in advance that it’s taxable,” said John Stoller, a CPA and former IRS agent.
When talk show host Oprah Winfrey gave her guests brand new cars on one memorable episode of “The Oprah Winfrey Show” in 2004, they learned they’d have to pay $7,000 each in taxes and were reportedly given the option to forfeit the prize.
This is a policy shared by ”The Price Is Right,” which had no comment when contacted by ABC News, and throughout the television industry as standard operating procedure.
Schwartz said she decided to offer most of her prizes on Craigslist, selling them for less than they were worth. She still walked away with enough money to start her own food truck and learned a valuable lesson.
“If you’re broke don’t go to a game show expecting to win,” she said.