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JEOPARDY CHAMPION "TAXABLE INCOME"

Updated: Jan 17

James is best known for his quick reaction time on the Jeopardy buzzer and leaping across categories, but he won’t be able to quickly leap over the IRS or the state of California when it comes time to paying taxes on his winnings.


"Jeopardy!" champion and professional sports bettor James Holzhauer lost in his 33rd episode of the TV game show but, of course, Holzhauer, 34, won big. He made $2,462,216 in those 33 appearances, including the $2,000 prize he received for finishing second in his last show. Only one "Jeopardy" champion, Ken Jennings, has made more money ($2,520,700) and had more appearances (74).


The IRS also won big. All winnings on game shows are considered ordinary income, taxed up to 37% 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, sports and betting website The Action Network reported. Combined, federal and California state taxes will put Holzhauer's net winnings at about $1.29 million — a 47.6% cut, the site said.


So, after paying over $1.1 million in taxes, James now knows the answer to this question: What is taxable income?


There's a lesson for the rest of us in this story: Prizes are taxable income. 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. 


For the best tax collection advice, please call as we can stop the IRS collection in most cases and give you financial peace of mind.



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