Could Players Cheat The Tax Code?

[BFritz21]

NFL contracts are taxed at 37%, but bonuses are only taxed at 22% until they hit a million dollars, so why don’t they just classify any money outside of what’s guaranteed as a bunch of bonuses for less than a million dollars?

It could be something as easy as listing it as a bonus for practices practiced or games played.

Or is it over a million for the entire year and not just individual paychecks?

[SunsetBengal]

(04-18-2023, 07:21 AM)BFritz21 Wrote: NFL contracts are taxed at 37%, but bonuses are only taxed at 22% until they hit a million dollars, so why don’t they just classify any money outside of what’s guaranteed as a bunch of bonuses for less than a million dollars?

It could be something as easy as listing it as a bonus for practices practiced or games played.

Or is it over a million for the entire year and not just individual paychecks?

Can you give us a link where that information came from?  Being able to read the rest of the article may offer insight as to the answer to your question.

[spazz70]

(04-18-2023, 07:21 AM)BFritz21 Wrote: NFL contracts are taxed at 37%, but bonuses are only taxed at 22% until they hit a million dollars, so why don’t they just classify any money outside of what’s guaranteed as a bunch of bonuses for less than a million dollars?

It could be something as easy as listing it as a bonus for practices practiced or games played.

Or is it over a million for the entire year and not just individual paychecks?

What does it matter?  If you owe 37 % on your total income at the end of the year and have not paid in that amount then you will owe the man.  Have you never filed taxes?

[BFritz21]

(04-18-2023, 09:07 AM)spazz70 Wrote: What does it matter?  If you owe 37 % on your total income at the end of the year and have not paid in that amount then you will owe the man.  Have you never filed taxes?

I minored in accounting in college and I know that some things are taxed differently, like bonuses are taxed at a different rate than a player’s normal income.

[spazz70]

(04-18-2023, 12:33 PM)BFritz21 Wrote: I minored in accounting in college and I know that some things are taxed differently, like bonuses are taxed at a different rate than a player’s normal income.

Same for me...  my salary is usually taxed at about 27%...whereas by monthly bonuses are usually taxed higher..around 35-40%....what your company withholds and what you owe at the end of the year are totally 2 different things.   It is all about tax brackets per pay and witholdings...It is all about total earnings when it comes tax time.

[BFritz21]

(04-18-2023, 07:53 AM)SunsetBengal Wrote: Can you give us a link where that information came from?  Being able to read the rest of the article may offer insight as to the answer to your question.

This one is just about taxing draft picks.

This says that signing bonuses are generally only taxed at the state level, which, like income, I'm assuming is taxed at a lot less of a rate than federal taxes, so why wouldn't they just make most of it a signing bonus and then take a minimal regular salary?

Just seems like there would be ways around the tax code.

[SunsetBengal]

(04-18-2023, 01:21 PM)BFritz21 Wrote: This one is just about taxing draft picks.

This says that signing bonuses are generally only taxed at the state level, which, like income, I'm assuming is taxed at a lot less of a rate than federal taxes, so why wouldn't they just make most of it a signing bonus and then take a minimal regular salary?

Just seems like there would be ways around the tax code.

According to the article from Forbes, it's only dealing with State taxes as they relate to signing bonuses.  If a player receives all of his pay via game checks, he has to pay the state and local tax rate for the city/state he played that week.  If he receives his money as a bonus, he's only taxed on that money in the city/state that he has his official residence established.  For example a player living in a 'no State income tax State' like Texas or Florida, they can save a large amount of money by electing to take their money in the form of a bonus.  Whereas athletes residing in high tax States like NY, Ill, or Cali, will feel a huge tax burden on said bonuses.

[BFritz21]

(04-18-2023, 01:31 PM)SunsetBengal Wrote: According to the article from Forbes, it's only dealing with State taxes as they relate to signing bonuses.  If a player receives all of his pay via game checks, he has to pay the state and local tax rate for the city/state he played that week.  If he receives his money as a bonus, he's only taxed on that money in the city/state that he has his official residence established.  For example a player living in a 'no State income tax State' like Texas or Florida, they can save a large amount of money by electing to take their money in the form of a bonus.  Whereas athletes residing in high tax States like NY, Ill, or Cali, will feel a huge tax burden on said bonuses.

That's what I'm saying: why don't players in those states like Florida or Texas do that?

[guyofthetiger]

I notice a lot of professional athletes live in Florida or Texas. They probably have a CPA take care of all the taxes for them. I lived in Texas and the local sales taxes were high. If it is legal, I don't consider that cheating. I consider that smart.