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The tax liability of professional athletes in California

On Behalf of | Nov 4, 2013 | Tax Controversy |

There appears to be controversy concerning the manner that professional athletes are taxed in the state of California. The average NFL player earns $2 million. California’s personal income tax rate is now at 13.3 percent – the highest in the United States. For professional athletes, this could mean combined taxes of close to 60 percent. When anyone does the math, one understands just how much these athletes are expected to pay in taxes.

What this all means is that NFL players in California may pay in at around $24 million for state taxes. Players from other teams coming to play in California paid close to $16.4 million. To put matters in perspective, of the $171.7 million collected from all athletes in California approximately $70 million of it was attributed to taxes paid by visiting athletes. And these figures are based on calculations before further tax hikes had been put into place.

Professional athletes often will end up filing one federal return and a number of state returns on top of that. How much visiting athletes have to pay is calculated by a formula that is dependent upon how many “duty” days that player is required to use in connection with his profession in that state. For example, tax officials will look at the numbers of days practicing, training, playing, and meeting concerning any particular game. Injured players traveling with the team can also be subject to taxes in the state where he is visiting.

With the salaries that professional athletes earn, few will probably feel particularly sorry for them. However, such a situation does bring up an understandable concern that tax authorities will go after what appear to be easy targets. These practices can at the same time make tax compliance more difficult for everyone.

It’s because figuring out what is owed and strategies for minimizing tax liability is so difficult that anyone with tax concerns may wish to speak to an able tax attorney. Tax attorneys can help individuals avoid making mistakes that could prove expensive. These attorneys can also provide a number of legal options concerning one’s case.

Source: Accounting Web, “NFL Players versus the IRS: It’s a Tough Tackle,” Teresa Ambord, Oct. 30, 2013


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