The Internal Revenue Service is likely to get a fat cut of a “Jeopardy” champion’s earnings.
James Holzhauer ended up losing in his 33rd episode of the game show. Holzhauer finished $58,484 shy of the record for all-time winnings.
Holzhauer struck it big by winning $2,462,216 in his 33 appearances, which includes the $2,000 prize he won for finishing second in his most recent show on Monday, June 3, 2019. Ken Jennings has the record for earnings ($2,520,700) and appearances (74).
The IRS is also going to be a winner. All earnings on game shows are treated as ordinary income, with the IRS taxing them up to 37 percent. On top of that, most states have an income tax as well.
According to the sports and betting website The Action Network, Holzhauer must pay taxes in California, given that the show took place in California. Holzhauer is actually a resident of Nevada.
Put together, federal and California state taxes will leave Holzhauer’s total winnings at $1.29 million.
The jeopardy player is getting a firsthand look at how dysfunctional both the federal income tax and California’s income tax systems are. America’s highest earners get chiseled every year by taxes, while receiving low-quality public services in return.