I just saw a TV ad for a tax prep service that used a couple of Kentucky athletes to sell their services, which raised the question: professional athletes have to pay proportionate taxes in many states where they play, so with all the money coming into college athlete’s pockets, do they have to do so also?
College athletes and taxes
- Thread starter Hawqize
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My understanding is they don’t because they aren’t employees…they’re independent contractors. So just have to pay state tax in their state of residency on top of fed and FICA.
No, because they are not paid for their playing the games (I know, but that’s the official stance). Their money is for appearances and such, so I would assume most of those happen in their respective state.
Warren Buffett, a few days ago, said if the 500 richest people/companies in America paid their fair share of taxes, nobody else would need to pay a dime. Think about that for a minute, those of you who have an actual working brain.
The gov doesn't care if you work, income is income. How basic is that?
A granddaughter of a friend of mine plays college basketball at a smaller college in Michigan and he just told me yesterday that she will owe taxes on $40,000 I think he said around $1,000. I didn’t ask if that was scholarship money or NIL or both.
I don’t think you understood the question. The OP was asking if players have to pay state taxes in every state they play in. They don’t because they aren’t employees. They only pay state taxes in their state of residence.
I don't know how that will work. I was an independent contractor for 15 years. Had to pay all my taxes on a quarterly estimated schedule, and then if I was short at the end of the year I had to make up the difference, and if I overpaid, my next years estimate was a bit less. Had to pay KC city tax because the office where I got my product was in KC, even though I didn't work in KC. I don't know how that state to state thing will work for them. I'd suggest these kids get themselves a good tax person before they end up with a big mess at the end of the year..
If that is the question then this is my thought process because I don’t know the actual answer..
I live out west and work remotely for a company in Cedar Rapids, I visit the home office for about 3 weeks a year… I don’t pay taxes in Iowa for the three weeks I am there at the home office that is headquartered in Iowa.
I used to live in CR working for Rockwell Collins and spent 26 weeks of 2011 in Anaheim working at a Boeing facility. 2 weeks in CR and then 2 weeks in Anaheim. I did not pay a penny in California taxes.
Wikipedia entry on the jock tax, https://en.wikipedia.org/wiki/Jock_tax
I'm not really sure how this would be handled, but it feels like the revenue sharing piece of this might be taxable in each state regardless of whether they are employees or independent contractors. NIL income could be a different matter.
I saw something a couple of weeks ago regarding BFL players. By law/contract, NFL players have to pay state taxes in every state they play in in the course of a year. If a player plays in New York and California in a season, he pays state taxes to them based on a pro-rated basis of his salary (per game)…I bet players hope they play a lot of games in Florida and Texas as opposed to NY and California!
You have to pay state income tax in the state where you earn the money. As mentioned above, NIL might not be taxed in every state you play because it is all "earned" (cough) in your home state.
I would think revenue sharing would be different.
Independent contractor status has nothing to do with it.
I would think revenue sharing would be different.
Independent contractor status has nothing to do with it.
We have a couple clients that have had NIL revenue. Nothing huge.
Yes they pay tax.
I also have a client I met with this week that played P5 college football a few years before NIL. He played 2017-2020.
There's currently something in the courts where he could get some money. Not sure how it works, he just mentioned there could be some additional income coming for him.
Yes they pay tax.
I also have a client I met with this week that played P5 college football a few years before NIL. He played 2017-2020.
There's currently something in the courts where he could get some money. Not sure how it works, he just mentioned there could be some additional income coming for him.
Concerning revenue sharing:
There may develop (via state laws) an agreement that would allow the player to pay tax only to the "home" state.
For instance, Iowa and Illinois have an agreement here in the Quad Cities that state taxes are paid to the employee's state of residence, not to the state the employer is located in.
Obviously, this would get complicated if some states decline such an agreement.
Furthermore, depending on the state in question and any tax agreements with other states, there would be some benefits to playing in low-tax and no-tax states. Probably enough to influence a recruits decision.
Does anyone remember what they did for Tory Taylor? I remember reading that we figured out something so he could legally get paid his last year here but I forgot the specifics.
Anybody with a working brain should be leery of other people's definition of "fair share".
I agree. But I do wonder if states are going to be willing to give up revenue. For example in Iowa, there are only 2 schools that will have revenue sharing, but many teams will visit Iowa in football and basketball.
Of course, then Iowa won't get all of the tax owed by Iowa residents. So, in short, I don't know. But I doubt it.
States like Florida and Texas (no state income tax) won't care.
You made me curious so I looked it up and here is the exact quote. I think he’s basically saying that if 800 companies all sent a $5b check than that would cover all of the government tax needs. It would be a whole other conversation to determine how feasible that would be…
We think it's appropriate that a company, a country that's been as been as generous to our owners, it's been the place… . I was lucky. Berkshire was lucky, was here. If we send in a check like we did last year, we sent in over $5 billion to the US federal government. And if 800 other companies had done the same thing, no other person in the United States would have had to pay a dime of federal taxes, whether income taxes, no Social Security taxes, no estate taxes, no… . It's open down the line.
That seems a bit dated. 800 x $5 billion is $4 Trillion. Far less than the Feds currently spend per year.
Warren Buffett has a screw loose. Not to mention, he is, and always has been, free to make voluntary donations to the US Treasury.
Taxation has never been about "penalizing" wealth. It is, and always has been, about power and control.
I’m sure all the athlete would have to do is ask some middle-aged jock sniffing fan to pay their taxes for them, and voila, said taxes would be paid… and then some.
