Have you ever dreamed of becoming a millionaire overnight by simply answering questions on a television show? The allure of game show winnings is unquestionable. But how much do winners really take home — and is it as financially rewarding as it seems?
Game show contestants often emerge from the spotlight with lucrative prizes, cash or otherwise. They’re often made overnight millionaires. However, is it worth the stress of the hot seat and the glare of the studio lights?
According to tax experts, game show winnings can run into the millions. The exact amount, however, is dependent on the show, the prizes and the participant’s performance.
Dissecting the Game Show Landscape
Firstly, not all game shows are created equal. The format plays a significant role in the potential winnings.
For instance, shows like “Jeopardy!” can lead contestants to substantial payouts, with record winnings going over $4 million. By contrast, shows like “Wheel of Fortune” and “The Price Is Right” often gift contestants with high-value goods rather than pure cash.
Jeopardy! As an Example
Understanding the true earning potential of participating in a game show requires digging into the figures. So, what do the numbers tell us about game shows?
The format of the show matters. Some shows — like “Jeopardy!” — can see contestants earn significant sums, with record winnings exceeding $4 million. “Wheel of Fortune” and “The Price Is Right,” on the other hand, often reward contestants with valuable merchandise as well as — or in lieu of — cash.
So is that “Jeopardy!” winner really taking home all that cash? Well, yes, and no. The ultimate winner of a “Jeopardy!” episode gets to keep all the money they won, and then join the next episode for another chance to take the top spot. As for the runner-ups of the episode (2nd and 3rd place), they take home $2,000 and $1,000, respectively.
Therefore, the “Jeopardy!” winner does get to keep all that money… but that’s prior to taxes.
The Taxing Reality of Game Show Winnings
One thing most people overlook when dreaming about game show riches is the tax man. Just like with lottery and gambling winnings, game show prizes are considered taxable income.
In fact, if you win at least $600, you’ll probably get a 1099-MISC tax form from the game show entity. The IRS also receives a copy, ensuring they’re in the loop about your sudden windfall.
Your tax burden is dependent on where you live and how much you win. You’ll certainly have to pay federal taxes on your winnings, but some states don’t have an income tax, offering some relief.
Non-cash Prizes: a Double-Edged Sword
Game shows love giving away exciting non-cash prizes like vacations, cars, and more. However, these prizes are anything but free, as they also come with a monetary value that you’ll need to report.
For instance, if you win a trip to Mexico valued at $10,000, you’ll need to report this and pay taxes on it. Not being able to afford the taxes on a prize can lead to serious penalties. Some winners choose to sell their prizes to pay off these taxes and keep the remaining money as profit, but there’s no guarantee this will work out.
Other Cash Prize Shows
When it comes to cash prize shows such as “Who Wants to Be a Millionaire?” and “Family Fortunes”, technically the winner gets to take home all that money, but they are still met with heavy taxes on that prize depending how their state taxes them. In certain jurisdictions — the U.K., for example — lottery or game show winners get all that money and are not taxed on it. In the U.S. you have the potential to be coughing up 40%.
Comparing Game Show and Gambling Winnings
Interestingly, game show winnings are taxed similarly to gambling winnings. Both are reported as income. However, for the lottery or most casino gambling, you can deduct your losses as long as they’re less than your winnings. This is not the case with game show winnings.
Is It Worth It?
Given the lucrative potential and the excitement of being on television, participating in a game show can be an exhilarating experience. However, it’s important to consider the hidden costs and financial implications, particularly taxes, that come with game show winnings.
Ultimately, as with any financial endeavor, it’s essential to go in with a clear understanding of the potential risks and rewards. After all, while the bright lights and big checks can be enticing, the reality may be a little more complex.
The article above was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates’ editorial team.
More From GOBankingRates