What Happens If I Win a Car?

Winning a car is the case where the prize can create a bill rather than settle one. This is general information rather than tax advice, but the mechanics catch people out often enough to be worth stating plainly.

Tax is owed on the value, in cash

A physical prize is taxable on its fair market value, which the company running it declares and reports on a Form 1099-MISC at $600 or more. No cash arrives with the car, so the tax has to be paid from money you already have. This is the whole difficulty.

The costs after that

Title, registration, sales or use tax in some states, and insurance are yours from the day you take delivery. A car with a high declared value carries a high running cost, which is the part people plan for least.

You can decline, or sell

Declining a prize before accepting it means no income to report, and some companies offer a cash alternative stated in the rules. If you accept and sell, you still owe tax on the declared value, not the price you got, so the rules are worth reading before you say yes.

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Before you enter

These are paid listings, so the useful part is knowing what to check before you leave this site.

Named sponsor: A real giveaway names the company responsible for running it. If the entry page hides the sponsor or only uses a famous brand name with no company behind it, treat it as unsafe.
Official rules: The rules should state the prize, approximate retail value, entry period, eligibility, winner selection method and how odds are determined. Missing rules are the strongest reason to walk away.
Free entry: A US sweepstakes must be free to enter. No purchase necessary is a legal requirement, not a courtesy. Any fee to enter or claim a prize disqualifies the listing.