When you enter sweepstakes, you dream of winning fabulous prizes for free. However, some prizes come with costs attached. That doesn’t necessarily mean they’re not worth winning, but it’s important to know what you’re getting into before you agree to a win. Here are some of the costs that may come with winning prizes.
1. Taxes on Sweepstakes Prizes
In some countries, including the United States, you’re required to pay taxes on the prizes you win. Depending on your tax bracket and the value of your prize, this could add up to a significant amount every year. (For more information, see How to Pay Your Sweepstakes Taxes.) If you live in an area where you have to pay taxes on sweepstakes prizes, it’s worth considering whether the prize is worth the cost.
2. Licensing and Insurance on Car Prizes
When you win a car, you’re usually responsible for paying for the sales tax, title, tags, and insurance costs yourself (be sure to check the rules to see if the prize covers any of these costs). If you need a new car, these additional costs add up to much less than you’d pay buying the same car yourself. However, if you don’t really need another car, you might want to try selling the car back to the dealer or skipping these contests (see How to Make Car Prizes Affordable for more information about reducing the costs of winning a car).
3. Costs Not Covered by Vacation Prizes
Winning a free vacation is a great way to save money while seeing new places. However, there can be many hidden costs to consider before accepting your vacation prize. For example, is transportation included? What about meals? Is there spending cash for souveniers and activities? Are hotel taxes, airport taxes, and port fees included? Do you have to pay extra to bring your kids along? What about baggage fees? And if these hidden costs aren’t covered, is the trip still worth taking for you? (For more information, see Don’t Make Assumptions about Your Vacation Prizes.)
4. Shipping and Installation Fees
Most of the time, shipping your prize should be included. However, there are some cases where you may be required to pay for shipping yourself, or pick up your prize in person. And if you win something like a new set of household appliances, a home theater system, or a room makeover, many times the prize only covers the items themselves, not installation. Make sure you’re prepared to cover these extra costs yourself, if the sweepstakes doesn’t cover them.
Many times, sweepstakes prizes work out to a deep discount on something you’d love to own, rather than being totally free. Before you enter, make sure you read the rules to find out which costs are covered, and which you’ll have to take on yourself. If you have any questions after you win, make sure you clear them with the sponsor before accepting your prize.
Have you ever received a prize that came with unexpected costs? Tell us about it in the “comments” section below.
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