I was watching a story about state taxes and their impact of professional athletes. Supposedly, Belichick said it was a factor in negotiating contracts as Massachusetts had a high tax rate. New York, California, Minnesota, and Wisconsin are also in the same boat. On a $10 million dollar salary it could be a difference of $900,000 between Massachusetts and Florida for example. Now apparently players are taxed in the state they play the game. Simple question, could a players contact be structured that the player is paid the minimum when playing in a high tax state and double salary in states that have no income tax?
I don't know the answer to this, but I always found it super interesting that athletes have to pay taxes in each state they play a game.
I don’t know the exact laws but I’m pretty sure that would be contested very quickly given the high profile nature of professional athletes.
If you work in a state you owe income taxes in that state even if you don’t live there. Football games are their work. I don’t know the rules of allocating their salary to the states - is it games only or does practice and other activities absorb a share?
I do not believe a word out of Belichick's mouth, especially since most high income earners who work in Boston or the inside the Beltway retain a residence in New Hampshire or Rhode Island. It is like 45 minutes from Providence to Foxborough and less if you have your residence just over the border of the state.
It is special rules that state put in to money-grub off of athletes. People travel all over the world for work and do pay taxes in all of the states/countries that they travel to as a partof the job.
Which I get, but if I go to a conference in a different state I'm not paying taxes there. It's just interesting.
No, that is false. The state of Massachusetts collects a 4% "jock tax" on salaries of any athlete that plays within the state. Mass has a 5% state income tax on income under $1M, and marginal rate of an additional 4% on income over $1M (none of which you pay living in New Hampshire where there is no state income tax). Additionally, there is a 5% tax on "unearned income" such as dividends, capital gains (@ 8.5%) and interest on your money (again, not paid if you live in New Hampshire - or at least maintain a residence there). Separate from state, and most municipalities in Mass have city excise taxes that go into paying for road upkeep. While you pay that in most New England cities, it was less in NH where I lived than say where the DEC facility was in Hudson, MA. I worked for Digital Equipment Corp for several years in Hudson, MA and lived in Salem, NH, just over the state line with thousands of other people who worked in high tech in Mass.
Just like any other job - those states with higher taxes have higher costs of living and typically pay more. If the nfl has a flat salary cap for all teams that does present problems for the high tax state teams.
Although the article focuses on very high paid professional athletes with even the term "jock tax" being used, I suspect that the same tax rules also apply to others who earn substantial incomes by performing in a number of states and/or foreign countries a singer like Taylor Swift being a prime example.
I can’t speak to laws on professional athletes but state income tax laws are dictated by the particular state. The laws vary state to state but typically if you don’t live in a state but work there, you do owe income tax for the work you do there (not including routine short term travel). Where it gets tricky is if you live in a state, do you get taxed for income made in the other states. Some states will tax all of your income if you live there, regardless of where you work, but will give you credit for taxes paid in other states.
Actually you get taxed in both states (assuming not a state w/o income taxes or there’s no reciprocal agreement) and receive a credit to offset your home state taxes.
These state taxes are just dumb, and no player should have to pay some other state tax just because they played a game in some other state. I wonder if people that pay these state taxes still get to deduct those taxes on the feds dime... err... on the taxpayers from every states' dime. I thought that was eliminated which is should be if it's not... But I like the idea of paying less for games you play in state taxed states. How is that even legal? What city or even state services should you have to pay for simply by showing up to play a game?
Where Belichek lives is irrelevant as his football income was taxed in the state where the games were played, not where his residence was. His endorsement income was likely treated differently, though.
The state in question and not the irs would care based on the suggested scenario. The irs would get their share regardless.
