Athletes in the Big Leagues Often Pay Big-League-Sized Taxes
We have previously written about the complex tax returns many Americans must file. By comparison, most of us have it pretty easy. If you have one job and live/work in the same state all year, you can probably file your own taxes using basic e-filing software.
Of course, if you own a business and/or travel a lot for work, your tax return is bound to be more complicated. Most people don’t realize it, but there is one group of earners with surprisingly complex tax obligations: professional athletes. Players in the NFL, MLB, NHL and other leagues often end up paying taxes in the various states where they play, and even large cities sometimes ask for their cut.
This phenomenon is often referred to as the “jock tax.” From the time it was enacted in the 1960s through 1990, it was rarely ever used. In 1991, California taxed an out-of-state NBA team and the practice has continued and grown since then.
For players who make huge salaries, the taxes imposed are steep. For younger rookie players however, the individual tax amounts may be small but are nonetheless a logistical headache. In a recent news article, one NFL player noted that he sometimes has to write checks and mail tax payments of less than a dollar.
Of course, with such complicated taxes, professional athletes need their own professionals. Certified public accountants and tax law attorneys often find themselves employed by pro athletes with complex tax issues.
While it is hard to feel sympathy for the “problems” faced by pro athletes, we can all agree that no matter how rich or famous you are, complicated taxes are a drag.
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