#athletes

Adequate record of business expenses

In order to claim a deductible business expense that is both ordinary and necessary to perform your job, you must be able to justify the expense and provide evidence of payment. In order to justify the expense you should provide written documentation to substantiate the cost, the date of purchase, the place or description of the expense along with its’ business purpose. Proof can be documented in a notebook and cost can be substantiated with a receipt, cancelled check, paid i

Massachusetts and Georgia Await Super Bowl Tax Prize

Even though Tom Brady lowers his non-resident tax by over $20,000 by playing in this year’s Super Bowl in Texas, his home state of Massachusetts will make him pay, win or lose Although all income is subject to federal tax, where the bonuses from this year’s NFL playoffs and Super Bowl becomes interesting, is at the state level. With last year’s Super Bowl played in California, all those who participated needed to allocate both their Super Bowl bonus, and their entire salary

Scherzer’s New Contract’s Net Value & Present Value Exceeds Kershaw’s Deal

Max Scherzer’s new seven year $210 million contract is a good example of how proper tax planning in a negotiation can increase its’ overall net (after tax) value. Much has been made of the resident and non-resident tax liability that professional athletes face in the multiple states and cities in which they preform services. Often referred to as the “Jock Tax” this liability is unique to each professional team and is determined by each team’s home and away schedule as well a

Sandoval & Ramirez Contracts Make Dollars & Cents

Over the past few days both Pablo Sandoval and Hanley Ramirez have signed with the Boston Red Sox and left their former California ball clubs and the state’s 13.3% tax rate behind. A closer look at the numbers shows how this signing not only makes sense on the field but also makes dollars and cents off it. While all athletes incur federal tax liability on their earnings, their exposure to state and local taxes will be dictated by the income tax policy for their home team’s s

New Jersey Eyes Super Bowl Tax Prize

Peyton Manning eyes a second Super Bowl ring while New Jersey has visions of taxing his salary. This Sunday, fans of the National Football League (NFL) will not be the only ones paying attention to the players in this year’s Super Bowl. Tax authorities from the State of New Jersey will also be keeping a close eye on those individuals playing in Sunday’s game. States targeting non-resident athletes to increase tax revenues is nothing new. However, this could be a substantial a

Is Tennessee’s Version of the “Jock Tax” Unconstitutional?

Authors Alan Pogroszewski and Kari Smoker examined this very question in their recent law review article and conclude that it is. Marquette Sports Law Review May 31, 2013 In July of 2009 the state of Tennessee imposed a Professional Privilege tax on athletes performing services in the NBA and NHL. Those athletes are assessed a $2,500 tax for each game they play, up to a maximum of three games in the state of Tennessee. In our article “Is Tennessee’s Version of the ‘Jock Tax

Tennessee’s Tax on NHL and NBA Athletes Unconstitutional

Hearings concerning controversial tax matter scheduled for later this week Is Tennessee’s version of the “jock tax” unconstitutional? Authors Alan Pogroszewski and Kari Smoker examined this very question in their recent law review article and conclude that it is. Is Tennessee’s Version of the “Jock Tax” Unconstitutional? appears in the spring edition of the Marquette Sports Law Review and examines the law using the framework established by the US Supreme Court for determinin

Howard’s End

State Taxes makes Dwight Howard’s Decision more Taxing There are several financial dynamics in Dwight Howard’s potential decision where he will play next season. First, there’s the length and the terms of the contract, which are dictated by the Collective Bargaining Agreement (CBA) of the National Basketball Association (NBA) and secondly, there are the unique income tax liabilities for each team and the states in which they reside. Under the current CBA, the Los Angeles Lak

The New Money Ball

The Oakland A’s have another disadvantage when pursuing free agents on the open market The plight of Billy Bean and the small market Oakland Athletics was highlighted in Michael Lewis’ 2004 book Money Ball. The stakes are different today and Bean’s biggest challenge comes from the state of CA rather than the large market teams in the League. California’s income tax structure has created a burden for its home teams: the state’s maximum income tax rate for 2013 is 12.3% with an

Fiscal cliff means higher taxes for athletes next year

Earlier this year, Federal Reserve Chairman Ben Bernanke stated, “Under current law, on January 1, 2013, there’s going to be a massive fiscal cliff of large spending cuts and tax increases.” The tax increases include cancelling the Bush era tax cuts of 2001 and 2003 which would increase the individual tax rate for those in the highest tax bracket from 35% to 39.5% and eliminate the payroll tax holiday, which would increase the payroll tax withholding from 4.2% to 6.2%. What d

Did Alex Rodriguez play himself into a better tax situation?

Alex Rodriguez made headlines this past post season because of his ill-timed slump. However, the irony is: this slump may actually improve his financial situation by more than three million dollars. Over the last three post seasons, Rodriguez hit only 10 singles and two doubles in his 75 official at bats for a .160 batting average. To make matters worse, this past post season he totaled just three singles and 12 strikeouts in 25 at bats. This slump and consequential benching

Show me the Money

Week one of the National Football League (NFL) season means a bonanza of tax revenue for New Jersey As week one of the NFL concluded with 16 games in 15 states, it’s time to look at the tax ledger to see which states were the big winners. With states looking for ways to increase their revenues, non-resident professional athletes are an attractive target for state tax collectors. According to spotrac.com, the 2012 total NFL payroll for player salaries is just under $3.4 billio

California Dreaming

Steve Nash’s recent signing revives international income tax debate Steve Nash is a two time league MVP who has played in the NBA since being drafted by the Phoenix Suns in the 1996 entry draft. Nash, from Johannesburg, South Africa, was raised in British Columbia and with his recent free agent status had many Canadians wishing he would return to Canada to sign with the Toronto Raptures. The potential of Nash signing in Toronto has renewed the debate over the tax liability of

Curveball

Curt Schilling’s Investment Failure Represents the Latest Example of the Unique Financial and Tax Implications Facing Professional Athletes Curt Shilling pitched 20 years in the major leagues and recorded 216 wins, two World Series titles, and millions of dollars in total earnings. Earlier this month, it was announced Schilling lost a majority of his savings. Turns out he owned 83% of 38 Studio, a video game company that filed for Chapter 7 bankruptcy protection in Delaware,

Does the “Jock Tax” Target Only Professional Athletes?

State income tax on non-residents incorrectly labeled a jock tax Author: Alan Pogroszewski The term “jock tax” first appeared in an article by Elizabeth Ekmekjian, “The Jock Tax: State and Local Income Taxation of Professional Athletes” published in the Seton Hall Law Journal in 1994. Since then, the jock tax has been highly publicized—but with little understanding of the difference between income taxes that specifically target professional athletes and the basic constitution

No Upset in Victory over IRS

Lamar Odom’s win over the IRS was based on well founded legal precedent and IRS tax regulations. Lamar Odom is a high profile athlete who last season won the NBA’s sixth man award for the defending two time champion LA Lakers. This season, following a well publicized trade to the Dallas Mavericks, he is scheduled to earn $8.9 million. But it’s Odom’s recent well publicized victory over the IRS that’s making headlines for the 6’10” power forward. Last October, Odom filed a law

Business Miles

Driving to work out this summer? Be sure to keep good records on the miles you drive. The IRS allows a $.51 deduction for every mile driven for business purpose. Off season training for a professional athlete qualifies as a legitimate business purpose thus the mileage is deductible. For more information on how to keep track of your business miles in order to justify them please refer to our news section: “Business Miles” #incometax #financialinvestments #tax #mileage #ame

Alternative Retirement Plans

If you are an employee, coach, or professional athlete at the minor league level and your organization does not offer you a retirement plan, you may meet the eligibility requirements to contribute to an Individual Retirement Account (IRA). Traditional IRAs provide two benefits: they reduce your current tax liability and provide funds for your retirement. For 2008, contributions are limited to $5,000 or if you are over 50 you may contribute an additional $1,000. A $5,000 con

Not Playing, But Still Paying

The Cautionary tale of Darryl Strawberry’s Battle with the IRS Darryl Strawberry’s tax and financial troubles tell a cautionary tale about how professional athletes can become prime targets for the IRS. Strawberry, whose career ran from 1983 to 1999, is still battling the IRS, according to a Notice of Levy reportedly sent to HarperCollins Publishing for $405,522 in back taxes, penalties and interest. These tax issues came to light when Tracy Strawberry, Darryl’s third wife,

The Value of Pujols

Are Athletes Overpaid or Well Paid? At the heart of this debate is marginal revenue produced. If the marginal revenue produced by an athlete is greater than the cost of his services, everyone wins. Prior to the fall of the reserve clause, which essentially forced indentured servitude on professional athletes, owners kept the revenue produced by athletes. Since free agency was implemented in the 1976 Collective Bargaining Agreement, baseball players have been able to demand a