It’s no secret athletes & entertainers pay a lot of taxes. With multiple income streams and most states looking to increase their tax dollars, athletes become easy targets under current tax rules. However, with high earnings comes the opportunity for great tax planning with strategies like incorporating to help keep more money out of the hands of the IRS.
Incorporating a business for revenue streams outside of sports is a great way to protect your net worth and reduce taxes. Whether you choose an S Corp or a C Corp, the most important aspect is creating a winning game plan and sticking with it. Abundant Tax Strategy can develop a strategy with you to secure your financial future for you and your family.
Good tax planning is essential to saving on taxes. There are several tax-saving strategies available to both individuals. These include tax deferral through qualified plans, tax exclusion through proper investments, and shifting income and deductions. We can review your unique situation and offer cost-effective recommendations.
Our goal is to make the preparation process as easy as possible for you and minimize your tax liability with careful planning. Your tax preparation interview can be conducted either in person, phone, or video – whichever is most convenient for you. Whatever your circumstances may be, we are here to give you the best advice to help you get through life’s challenges.
Whether you need current year returns prepared or need to plan for retirement or your child’s education, our professional team can assist you with all of your needs.
We have helped many business owners make sense of this overly complicated process through our excellent organizational capabilities and use of techniques designed to maximize our clients’ tax returns. We work with local clients all over the United States and are well versed in local tax laws.
Get the Right Financial Guidance
In the same way the NFL Players Association held a personal finance camp for their athletes let Abundant Tax Strategies guide and teach you some of the skills of the trade that will save you thousands of dollars each year. With years of experience in the intricacies of the athletic field, we will guide you to the best solution possible based on your own individual scenario. No two athletes are alike, and neither are your tax burdens.
The Jock Tax and Its Origins
The Jock tax is essentially a state taxing system in place for athletes in addition to the regular federal and state income taxes they pay. This tax is calculated based on the number of days the athlete has spent in the state divided by their workdays.
Jock Tax = Days in State / Workdays
MICHAEL JORDAN’S REVENGE
Professional level athletes can earn extraordinary levels of income, which prompted California to tax Michael Jordan following a victory against the Lakers in the 1991 NBA Finals. Illinois, Jordon’s home state, decided to fight back against this by stating they would also impose the same taxes on players who play in their state. This event has been titled “Michael Jordon’s Revenge”.
HOW ATHLETES GET AROUND JOCK TAX
You may have noticed that there are quite a few athletes that reside in Florida. Florida is one of four states that does not currently impose a jock tax. The other three are Texas, Washington, and Tennessee. This is due to the lack of state income tax in general, which allows these players to avoid both the jock and state income taxes they would otherwise pay.
HOW DOES JOCK TAX AFFECT NON-ATHLETES?
One might think that Jock Tax only affects the players but, in reality it has a huge effect on non-athletes who are also in the sports industry. Team staff members such as equipment managers and team trainers must also pay the jock tax. As you can imagine, this poses a substantial burden on team staff in filing multi-state tax returns and the added tax liability that comes with it, especially since team staff earn far less income than highly-compensated professional athletes.
Abundant Tax Strategies has extensive experience dealing with such burdening tax applications as multi-state filing of tax returns. Navigating through federal and state tax codes is what we do best. Our client-focused professionals will guide you through tax compliance while minimizing your tax liability.