Amy Schneider has been on a “Jeopardy!” roll.
The Oakland, California-based software engineering manager recently surpassed $1.1 million in winnings on the TV game show, becoming the first woman and fourth person to break the $1 million mark. On Friday, she beat James Holzhauer’s record for the third-most consecutive games won, with 33 wins under her belt.
Whenever Schneider’s winning streak is up, she’ll likely walk away a wealthy woman.
She’ll also have to pay a large chunk of those earnings to Uncle Sam.
“She’s going to have a pretty hefty tax bill because the income she’s earned on the show is ordinary income,” said Megan Gorman, an attorney and managing partner at Chequers Financial Management in San Francisco. “She’ll be paying some of the top rates in the United States on this income.”
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How much she’ll owe in taxes
Winning more than $1 million will place Schneider in the top tax bracket in the country. Given that Schneider is likely a single filer, that means she’ll have a 37% federal tax rate.
In California, where Schneider lives and the show is filmed, she’s subject to one of the highest state tax rates in the country.
Again, winnings of more than $1 million will put her in the top tax bracket in the state, meaning she’ll owe an additional 13.3% — 12.3% is the top tax rate, and income of more than $1 million is subject to an additional 1% mental health services tax, Gorman said.
After Friday’s game, Schneider had won a total of $1,111,800. With that sum, she’d pay $411,366 in federal taxes and $147,869.40 to California.
That’s 50.3% of her winnings gone to taxes right away. Still, she’d take home $552,564.60.
“It’s a pretty arduous win from a tax perspective,” Gorman said.
It’s good news for Schneider that she’s a California resident, though, Gorman explained.
That means she won’t have to pay taxes on the income in two states, as other winners have had to. In that case, they’re given a credit back for the income taxes paid in California, which adds a layer of complication to filing that Schneider can avoid.
Professional help is a must
To be sure, half a million dollars is still a life-changing number to win, Gorman said. But “it’s pretty amazing how much of it goes to taxes,” she added.
Still, it’s important that Schneider seek tax advice from a qualified professional to ensure she pays her taxes correctly. Many game shows do not withhold any portion of winnings for taxes, leaving it on the contestant to send the correct amount to the IRS.
“Hopefully Amy is speaking with her tax professional now in order to move forward with getting the right advice,” said Gorman.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.