Most people probably think that winning on a game show like Wheel of Fortune is a dream come true; suddenly you have a ton of cash you hardly had to do any work for at all. And, you get to walk away dreaming of what to do with all of it, right? Uh, not exactly. What most people don't realize is that prizes, whether that's in cash, trips or items like cars, are taxed like income by the lovely IRS. This means, of course, that winners don't just walk away with their pockets lined with thousand dollar bills when they rack up the prizes on a program like Wheel of Fortune. They have to pay the taxes on those prizes as if they spent a whole year working away to gain them, and, thus, come away with much less than what they actually won.
In the case of Wheel of Fortune, when you win trips, the show allows you to find less expensive versions of the trips you win, thereby decreasing your overall tax bill. But, if you've won any significant amount of cash and/or prizes, that will still leave you with a hefty tax payment at the end of the show. Matt McMahan, who taped an episode of the show in July which just aired as the Season 34 premiere on September 12, walked away with $31,700 in cash and prizes, but he's definitely not going to be able to put that much into his bank account.
First of all, along with $16,400 in actual cash, Matt McMahan won two trips worth a total of $15,300 (a cruise down the Danube River which could take him through up to 10 countries, and a vacation to Chile). McMahan did some research, though, and was able to come up with vacation options that would only cost $10,800. He now estimates that, after winning an amazing amount of money and prizes, he'll only be about $6,000 richer after all his taxes are paid.
Still, though, getting almost free trips isn't worth nothing. McMahan and his partner didn't consider foregoing the vacations to pocket the extra cash they would net from them:
We would have loved the extra $2,000, but given that it's just the two of us and we share living expenses, experiences are worth more than money right now.
Well, that's certainly a winner's way to look at things, don't you think? So, if you're considering trying out for a game show, just know that ending up on a program like Wheel of Fortune can have some drawbacks, unless, of course, you're more concerned with experiences than cash.