The Price is Right, But Beware the Taxes
There is nothing quite like winning a prize, so one can imagine the amount of excitement contestants on the popular show “The Price is Right” are subjected to after winning such rewards as brand name appliances, trips to exotic locations, and brand new cars. But what happens to the contestants after their glorious fifteen seconds of fame? Here’s a hint: You don’t drive off the back lot with the brand new car you won, and you might find yourself unprepared for the hefty taxes coming your way before you can even get your fingers around your new set of car keys.
One particular contestant, Andrea Schwartz, found out the hard way when she amassed $33,000 worth of prizes. including a brand new Mazda 2 compact car, a shuffleboard table, and a pool table. Before she could claim her prizes, she first had to pay the California state income taxes in the amount of $2,500. If she had not arranged the paperwork, paid the taxes and picked up her car all within 10 days she would have forfeited her prizes. When all was said and done, Schwartz had to scramble to come up with the funds or risk forfeiting the prizes she won.
While it is nothing new that people pay taxes on winnings (in most cases), Schwartz’ experience on “The Price is Right” provides a valuable lesson when dealing with any windfall event you may experience in your own life. Winning the lottery, receiving an unexpected inheritance, cashing out a retirement plan. These financial events can be a welcome occurrence in your financial life, but the fact of the matter is, each of them raises serious financial questions that you have to deal with -and quickly.
As in the case of any sudden windfall event in life, the tax professionals at Talley LLP can make the most of both your earnings and winnings.