What to Do if You Win a Car
Thu, 10/19/2017 - 11:55
Several years ago, Oprah made a big splash on her talk show when she gave ever member in the audience a new car. As she deliriously chanted, “You get a car! You get a car! You get a car!” the giddy audience members found keys under their seats for some new version of something with four wheels. This was meant to be a promotion by the automaker to push sales of this new model. Here we are years later and nobody can remember the car. However, they do remember, “You get a car!” Oprah took her audience out to the parking lot where all the cars were lined up like a dealership. There were tears from moms who needed the wheels. There were stories about how the family car just broke down. Lots of hugs all around and Oprah was once again queen of the airwaves. Then reality hit. That free car (it was a Pontiac G6 … I looked it up) was valued at around $28,000. That meant the new owners would have to fork over $6,000 in taxes. Of course, you could look at it as getting a brand new car for only $6,000. Still, free wasn’t exactly free. The Price Is Not Always Right One game show that gives away cars left and right is the still popular The Price Is Right. In fact, anyone who wins the fabulous showcase showdown is going to be awarded a car. Before you can even say, “Fill ‘er up!” you will be presented with tax forms to fill out. The rule is you have to pay the taxes to the state where the prize is given out. The Price Is Right is filmed in California and they won’t let you leave the state until you fork over the dough. Can’t you wait until April 15? Well, no. You need to pay right away. Not only will you be paying the sales tax, but also the vehicle registration fees. That you can do in your home state, but first you’ve got to get the car there. Most game shows will ship the car to your home address but if you want it to go somewhere else, that will cost you. You could also be slapped with an income tax because the value of that car might be considered extra income. Bottom line: You’re looking at paying one-third the value of that car before you can even drive it around the block. Rotten Deals Then there is the issue of the car’s value to be considered. We all know the best way to go shopping for a new car is to be loaded with research. Nothing strikes fear in a car salesmen like a buyer armed with computer printouts! Using your research, you’ll be able to know exactly what the MSRP is and how much you can shave off of that. Don’t you just love beating the dealership for a couple thousand off a car? Well, with the free car you win, that MSRP is locked and loaded. There is no negotiating off the price. You’ll be stuck with that fixed amount and that is what you’ll be paying taxes on. Suddenly, winning that $75,000 Jaguar doesn’t sound so good. Go Ahead and Sell Many folks opt to take their prize and sell it for cash. We all know that selling a new car means selling a depreciated car. Plus, you still have to pay the taxes on the sale, but at least you’ll have the cash in hand. That’s nice, but then there is the hassle of looking for a buyer, having that buyer check out the car, making sure they have the money, fixing things with the DMV … the list goes on. Winner Beware This is all meant to be taken as a cautionary tale. Before you buy that raffle ticket or go on that game show to win a car, you better know what you’re getting into. Yes, the taxman will come a knocking. In fact, you’ll probably notice in the fine print on that raffle ticket or release for the game show that you’ll be responsible for all the fees and taxes. In other words, there is no such thing as a free ride.