Burrow's Contract With Taxes And Other Fees......

[Luvnit2]

(08-22-2023, 10:16 AM)Crazyjdawg Wrote: Yep. If someone is making $100,000 per year, they're really only making about $75,000 per year and that's before you think about the pre- and post-tax deductions like healthcare, dental, vision, 401k, HSA, life insurance, AD&D/Critical illness insurance etc.

Out of curiosity, I checked my earning statements and taxes (federal, state, local, FICA, medicare) take up about 16 to 19%, depending on how much I choose to withhold (I recently adjusted my W4 because my second child was born, which lowers my tax burden due to credits) and my deductions like insurance, HSA, 401k etc are about 18 to 20%, depending on how much I send to 401k and HSA accounts.

So I'm only making about 61 to 66% of my annual salary in dollars hitting my bank account and, as you said, Joe has additional fees like his agent fees (which I think are set at 3% of the total contract in the NFL.)

He will also be in the maximum tax bracket for a single filer, which is 37% for everything he makes above $578,125 per year, which will be the majority.

So yea, I think 50% is a pretty reasonable estimate as to what he will make on any contract he signs.

It depends on how they set up the contract. He can defer income of the contract to avoid taxes. Also, just an FYI, the 37% is the maximum tax on income, but 23% is capital gain taxes he can use if he defers income a few years minimum.

He will pay taxes to city of Cincinnati for games weeks in city, he will pay city taxes (if applicable) to city for road games. In some cases, no city taxes, in others taxes are higher.

As for expenses, they come off of his income and reduce his tax liability. Many NFL players defer income to not only reduce current tax liability, but also to build a retirement off ramp. 

Any deferred income, the Bengals would have to place into an account (they can earn interest, not the player) to pay it as the contract dictates.

A player like Joey B. can also get a break from an agent on their fees. It is like negotiating with a real estate agent, the higher the selling ask price, the lower the rate. It is very common to pay 5% to sell a house versus the standard 7% ask by real estate agents.