If you want a tax-free pot of gold, cash in on the one you see hovering over a rainbow. The tentacles of the IRS can’t reach that high in the sky.
James Holzhauer lost in his 33rd episode of Jeopardy!, which aired Monday, finishing $58,484 short of the all-time winnings record.
Of course, Jeopardy! James won heaping pots of gold. He made $2,462,216 in those 33 appearances.
Only one Jeopardy! champion, Ken Jennings, has made more money ($2,520,700) and had more appearances (74).
Alas, when it comes to our money, the IRS can squeeze a quarter until George Washington’s replica blinks. Uncle Sam sticks to our earnings as stubbornly as saltwater taffy sticks to pricey bridgework.
Not surprising then that the IRS also won big with Holzhauer. All winnings on game shows are considered ordinary income, taxed up to 37 percent by the IRS. And most states have state income tax, too.
Even though Holzhauer is a resident of Nevada, the game show took place in California, which means he must pay taxes in that state. Combined, federal and California state taxes will put Holzhauer’s net winnings at $1.29 million — a 47.6 percent cut.
You could say that Jeopardy! James had a once-in-a-lifetime experience that elicited an evocative high and created a cavernous low.