Friday, December 21, 2018
MarketWatch, Why Pro Athletes May Lose a Fortune Because of the New Tax Law:
Because of changes to the tax law that went into effect this year, professional athletes might need to put their CPAs on speed dial.
That’s because players in sports leagues like the NBA, NFL, MLB, WNBA and NHL have traditionally been able to deduct tens or hundreds of thousands of dollars for things that they no longer can.
“One of my players makes $2 million a year, and it will cost him $80,000 more now because he can’t deduct state taxes [over $10,000], agent fees, workout clothes, meals and entertainment, and his cellphone,” says Steven Goldstein, a CPA with Grassi and Co. in New York who works with over a dozen professional athletes and celebrities.
And players who make tens of millions of dollars a year will potentially pay hundreds of thousands more a year in taxes.
The reason athletes are taking this hit is because individuals can no longer deduct more than $10,000 for state and local taxes (SALT) or declare miscellaneous itemized deductions for work-related expenses and investment fees. And these changes, especially the latter, will cost pro athletes more than most people. ...
What about the argument that superstars like LeBron James make tens of millions of dollars a year but also live in high-tax states like California? “LeBron made a business decision when he went to the Lakers,” Goldstein says, referring to the additional endorsement and entertainment-related money he can make by being in Los Angeles. He adds that losing 50% to taxes (37% federal and 13% state) of, say, $10 million, is still $5 million.