Some gambling outlets offer special contests or giveaways where they award you with non-cash prizes. If you happen to go on a game show, for instance, you could come home with a heap of items and no cash. You must pay taxes on the cash value of the prize as if you won an equivalent amount of cash. That means whatever the value of the car, the trip, or whatever you’ve won is, you’ll have to claim it as if you received the same amount of income as cash.
Depending on the value of the prize and your annual income, the tax bill might be beyond your capacity or desire to pay. In that instance, you’ll need to ask the prize-granting entity if they can award you the equivalent cash instead. If not, you may consider walking away from claiming the prize. As nice as it would be to get a new car, you don’t want to end up putting yourself in a worse financial position than if you’d never won it in the first place.