They seem to have it all: they play a game for a living and are rewarded with riches the Sun King would envy.
Nowadays, though, professional baseball, football and hockey players, along with pro golfers, tennis stars and other gifted sportspeople, may be feeling more like ordinary mortals. The Tax Cuts and Jobs Act has eliminated a host of deductions they once enjoyed. Their tax attorneys, financial advisors and accountants will likely be facing busy days.
One CPA laments the case of a client, a highly paid athlete, who is taking an additional $80,000 tax hit this year. Under the old regime, state taxes, agent costs, clothing used for workouts (they use up a lot of gear), meals and even cellphone charges were deductible. No more. Athletes are used to playing with pain, but this has got to hurt.
The client in question earns $2 million per year – rather modest in comparison to the superstars. The highest-paid stars could see their tax bills boosted by six figures. Pause to lament for LeBron James, who between his salary and endorsements earned north of $80 million in 2018, and the sadness that will accrue to him before April 15.
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Most of us know the feeling. So should anyone really care? In fact, many professional athletes earn relatively modest sums. Their time in the game is limited in most cases, and expenses are high: agents, financial managers, taxes of course, and the many family and friends who perhaps have become dependents. It isn’t all rose bowls for the pros, and while Mr. James’s case is unlikely to be fatal, more limited talents will likely feel the pinch.
For their advisors, mitigating the effects of the tax code can be tricky.
For more information, please read:
Why pro athletes may lose a fortune because of the new tax law | MarketWatch