Solving Professional Athletes’ Unique Tax Needs

July 14, 2021

When professional athletes travel for “away” games, they not only lose the home-field advantage, they also encounter several complicated tax issues. Visiting athletes are typically required to pay income taxes, the so-called “jock tax,” in any state or locality where they play. That means top-earning athletes could owe many thousands of dollars for a single day’s work in high-tax states like California. For players who repeatedly travel to dozens of states a year, things can get complicated — and costly— fast.  

At CJBS, our professional athlete tax services team helps clients from the MLB, NBA, and NFL navigate state reporting laws, along with other complex tax requirements. Our team understands that while no two clients have the same financial situation, elite athletes are the best at what they do and require discrete, best-in-class service tailored to their unique needs.  

Working with professional athletes worldwide, CJBS is skilled at simplifying athletes’ extensive tax requirements and educating them on ways to maximize their wealth and minimize their tax liability. For example, one of the many services we provide is helping athletes determine their state of residency, defined for tax purposes as where someone spends at least 183 days. (If someone spends less than 183 days in any given state, residency generally defaults to the state where they have a driver’s license or, for those without a license, your mailing address or where you registered to vote.) Before an athlete signs a contract that would involve relocating, the CJBS team helps assess what tax consequences that relocation may have on the athlete financially. 

As for that “jock tax,” interestingly, it was Chicago’s own Michael Jordan who inspired the policy. According to NBC Sports, when the Bulls beat the Lakers in the 1991 NBA finals — and celebrated the win with epic parades and more — California decided to take a bite out of Jordan’s huge salary by taxing him. Today, CJBS helps athletes track their actual days played out of state and reconcile that with taxes owed. That’s important because states and localities routinely track which games are played in their area and send tax notices to all players on the visiting team, even those who weren’t there, as information about athletes’ travel is readily accessible. 

Working with clients in Chicago and across the world, our team also helps athletes playing internationally navigate the foreign earned income exclusion and foreign tax credit to reduce their taxable income. If a Canadian player lives in the U.S., we have the resources and relationships to file their Canadian taxes.  

Additionally, the CJBS athlete tax team has the experience to deftly guide athletes through everything from complex salary negotiations to product endorsement deals to royalties — allowing them to stay focused on the game. 

Our expert services not only benefit the athletes themselves, they help players care for the next generation. “I was personally thrilled to help a client save enough money on taxes to fund his daughter’s future college education, all by knowing the rules and maximizing them for my client’s benefit” explains Ryan Guedel, CPA and Partner at CJBS.  

Contact us if you’d like to learn more about our services for athletes. 

Stay safe & healthy,  

The CJBS Team