Playbook: The Jock Tax Rule
I want to tell you about the jock tax rule so you are not like me when you first earn an income and file your taxes. I almost accused the CPA I used my rookie year for trying to swindle me because I didn’t understand the jock tax rule. I remember calling my dad when it was tax season and asking him why I’m getting taxed in Utah and Texas when I lived in Philadelphia, Pa at the time. He simply replied after laughing for a few minutes, “ It doesn’t matter where you live, you still get taxed where ever you play.” After I complained how that was unfair, I went to google and looked up “why do athletes get taxed in every state they play?”
What consistently came up was the term the jock tax rule which led me to do some further digging.
So what exactly is jock tax?
The Jock Tax is essentially income tax counted against any visitor to a city or state earning money in that jurisdiction. That means you are getting taxed for any game you play on the road just like you get taxed where you live. This translates to not only to athletes but coaches, staff, trainers, and even people that conduct business on the road.
This is important for athletes to understand. As athletes you don’t want to risk getting in trouble trying to work around taxes especially with your information being public in terms of scheduling and road games. Athletes should work with their financial team and accountants, so they are not shell shocked paying taxes for business conducted away from their home. In the MLS you play at least 17 games on the road. That would mean you are getting taxed proportioned to your salary and where you play because of different tax rates in the select state or city you’re playing in.(Some states don't impose a jock tax). For a guy like Cam Newton in the NFL, playing in California could cost him big bucks.
That means you are getting taxed for any game you play on the road....
As an athlete it is vital you understand different tax implications so you avoid getting in trouble especially with the spotlight on you