Fans of “Jeopardy!” know that contestant Amy Schneider just ended an incredible run on the long-running game show, winning nearly $1.4 million and 74 consecutive games.
But while Ms. Schneider is now off of TV “Jeopardy!,” she now finds herself in tax jeopardy.
That’s because she is going to owe around $625,000 in taxes, or a little over 45 percent of her winnings.
Such winnings are taxed as ordinary income. And because of her success, Ms. Schneider will find herself in the highest federal income tax bracket, 37 percent. That’s about $471,000 in federal income taxes she will owe Uncle Sam.
And Ms. Schneider lives in California, which has one of the highest state income tax rates in the country. California taxes will cost her more than $150,000.
Of course, Ms. Schneider will still be left with around $755,000, which is certainly a tidy sum. But California’s high cost of living and other taxes means even that sum won’t go as far as it would almost anywhere else.
And, as we pointed out last week, California is considering raising its taxes even higher.
There’s no way for her to dodge paying over 45 percent of her winnings in taxes. But we suggest Ms. Schneider consider using her remaining winnings to relocate to another state with lower taxes and a lower cost of living.
That’s because, unlike the one-time thrill of winning a game show, there is no end to tax jeopardy.