'Jeopardy James' Wins Again...and Ups His 2019 Tax Bill
After winning the "Jeopardy!" Tournament of Champions, James Holzhauer will owe the IRS and California even more on April 15.
The king has reclaimed his crown! James Holzhauer, who won 32 straight "Jeopardy!" games earlier this year before losing to Emma Boettcher, just beat Boettcher and Francois Barcomb to win the 2019 "Jeopardy!" Tournament of Champions. For his latest victory, the quiz-show wiz will pocket $250,000, which brings his total "Jeopardy!" winnings for the year to a whopping $2,712,216. But, of course, Holzhauer won't be able to keep all that money. The IRS and the State of California are going to want a piece of the action, too. Their tax bite was already going to be high, but just by winning the Tournament of Champions, Holzhauer will owe about $125,750 more in federal and state taxes.
Holzhauer's total "Jeopardy!" winnings will put him in the highest federal income tax bracket for 2019, which means he'll pay tax on at least a portion of his winnings at a 37% rate. As a result, he'll likely have to pay around $942,000 of his winnings to the IRS. (Since Holzhauer is married, we used the tax rate schedules for taxpayers filing a joint return.)
Even though Holzhauer lives in Nevada, where they don't have an income tax, he'll also owe California income tax because "Jeopardy!" is taped in the Golden State. California's highest marginal tax rate is 12.3%. However, there's an additional 1% surcharge on all taxable income over $1 million that's imposed to help pay for mental health services in California. For a joint filer, that comes to around $320,000 in California tax.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
When you add it all up, the combined federal and state income tax on Holzhauer's winnings comes to about $1.262 million — or approximately 46.5% of his winnings. That leaves a little over $1.45 million that he'll actually get to keep for himself. To make sure the IRS and California get their cut, the taxes will be withheld from his overall payout.
There's a lesson for the rest of us in this story: Prizes are taxable income (for non-cash prizes, tax is based on the fair market value). So, if you ever win a game show, lottery or even a local raffle, don't go out and blow all your winnings without first putting some of it aside to pay the government.
QUIZ: Can You Answer Jeopardy's Trickiest Investing Questions?
Rocky Mengle was a Senior Tax Editor for Kiplinger from October 2018 to January 2023 with more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, Rocky worked for Wolters Kluwer Tax & Accounting, and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky holds a law degree from the University of Connecticut and a B.A. in History from Salisbury University.
-
Stock Market Today: Nasdaq Spirals as Netflix Nosedives
A big earnings boom for credit card giant American Express helped the Dow notch another win.
By Karee Venema Published
-
Get These 40 Earth Day Deals and Discounts
Monday, April 22, is Earth Day. Many of your favorite retailers are celebrating with deals on sustainable products, recycling services, and more
By Kathryn Pomroy Published
-
'Instant' EV Tax Credits Are a Hit: $580M Paid This Year
EV Credits Claiming federal electric vehicle tax credits at the point of sale is a new and popular option in 2024.
By Kelley R. Taylor Last updated
-
Retirees Face Significant Tax Bills Due to Fraud
Fraud A new report sheds light on how older adult scam victims end up with big tax bills and lost retirement savings.
By Kelley R. Taylor Last updated
-
Tax Day: Is the Post Office Open Late?
Tax Filing Tax Day means some people need to mail their federal income tax returns.
By Kelley R. Taylor Published
-
High Earners: Beware of These Illegal Schemes to Lower Taxes
Tax Schemes The IRS says high-income filers are targets for several illegal tax schemes.
By Katelyn Washington Last updated
-
Mailing Your Tax Return This Year? What to Know Before You Do
Tax Filing There are plenty of reasons not to mail your tax return this year, but here’s what you should know if you are.
By Katelyn Washington Last updated
-
IRS Warning: Beware of Smishing and 'Helper' Tax Scams
Scams Tax season is a time to look out for email and text message scams.
By Kelley R. Taylor Last updated
-
Most Expensive States to Live in for Homeowners
Property Taxes High property tax bills make the places on this list the most expensive states for homeowners to live in.
By Katelyn Washington Last updated
-
Don’t Miss This $2,500 Tax Break for Paying Your Student Loan
Tax Deductions Do you qualify for the student loan interest deduction this year?
By Katelyn Washington Last updated