You have to pay a lot in taxes

What you end up paying in taxes is based on what the show says the prizes are worth. Foreman says he paid at least 30% in taxes.

"California sales tax was automatically deducted from the check I received for the amount of the game systems and movie tickets. Then, at the end of the year, I received a 1099 to do my state and federal taxes with," Foreman says.

Elliott says the amount a show will pay a winner in lieu of the actual prize, as well as how it values other prizes, is based on fair market value.

"Fair market value is the amount by which a willing buyer would purchase from a willing seller; estimates are used when something is unique," he says. "Items such as a vehicle are based on sticker price with options. Airfare is difficult, as it is based on many variables such as travel time, cities traveled, etc."

But game shows don't always look at the fair market value that you would pay in a local store. They use what they might pay. And if their price is higher because the show is taped in a more expensive area than where a contestant lives, the contestant winds up paying more in taxes.

"The prize value is usually based on manufacturer's suggested retail price, which may be 20% more than what it is actually worth," says Martha O'Gorman, Liberty Tax Service's chief marketing officer, in Norfolk, Va.

For example, a New Yorker who wins a 2011 Chevrolet Traverse might be looking at paying taxes on an MSRP of $29,999, even though price tracker Edmunds.com reports most buyers are paying just $29,076 for the SUV. That's an extra $231 in federal taxes for someone in the 25% federal tax bracket.

Game show winners can fight the estimated values in tax court, but those legal battles can take months and rack up hundreds of dollars in court costs, negating any savings in taxes.

Typically, Elliott says, contestants who win cash can decide whether they want any taxes deducted -- to reduce how much they'll have to pay the following April.

When state taxes are withheld, the money "is automatically paid to the state where the prize was won," Elliott says. That's not a problem if you happen to live in the state where you won. But if you don't, you could be taxed twice.

"If you live in New York but win on a show in California, those winnings, or income, are taxable to California on a nonresident return. They are also taxable on your New York return," Elliott says. "You would receive a credit to avoid double taxes in this situation, though you would pay some tax after all, since the tax in California for a nonresident is approximately 10% and a non-NYC resident is about 7%. So you would pay California the higher amount and get a credit on the lower New York amount."

If you lived where there was no state income tax, such as in Florida, Texas or Washington, you'd still have to file a nonresident tax return to pay California approximately 10%.

Then there are the federal taxes that winners have to pay.

"Most people fall into a bracket of about 25%. However, federal taxes could be as high as 35%, depending on how much you win," Elliott says. And remember, winning big could push you into a higher tax bracket, which means you'd pay more at the end of the year on all of your income.