High Net Worth Accounting Firm

Why Taxes for Professional Athletes Are Complicated

The only two things in life that are certain, as they saying goes, are death and taxes. The problem is, taxes have become quite complex, especially for pro athletes and other professionals who travel to certain cities, states, and even foreign countries for the purpose of business.
Pro SportsIn the case of professional athletes, the business is the sport in question. Football teams travel for at least eight games in a typical season. NBA teams play more often and travel to other states more frequently during their seasons, as do NHL players who have the added burden of traveling to Canada for several games during their season too.
What this all means for taxes, is that it’s really complicated! Here’s why.
State and City Taxes
Many cities, especially those hosting facilities that bring in professional sports games, have adopted special city taxes to impose on professional athletes in order to help offset the costs of their sports facilities. It’s an ingenious method, on behalf of the cities, to bring in tax revenue, without involving their constituents.

State income taxes are a given in most states, and is something players are expected to pay in every state in which they play in a given year and for every game they play in each state.
Complicated Formulas
Face it, few athletes are mathematical geniuses. They may have more than a little skill when it comes to reciting states, but complicated accounting formulas are often a little outside their wheelhouses. They have better things to do with their brain power, after all, like devoting themselves to improving their games.
Unfortunately, the formulas are so complex that only an accountant could possibly love them, oh and city and state bean counters who can’t wait from the dollars to roll on in from the 53 players on the rosters of at least eight different NFL teams each year.
Don’t forget the tax revenue for trainers, coaches, equipment managers, officials, and more that travel with these teams as they take their games on the road. Other sports have even more games in other cities throughout the season raising the stakes even higher for host cities and states.
Mitigating the Costs of Doing Business Across State Lines
There are things players can do to help relieve some of their excessive tax burdens, otherwise known as the “jock tax.” They aren’t big bold moves, but they can save a great deal of money in taxes each year for players that take advantage of them.
Establish Permanent Residence in States that do not Tax Income
This will not eliminate all your tax burden, but it will go a long way towards relieving some of the burden to give athletes extra breathing room. Popular states for consideration are Florida, Texas, Nevada, and Wyoming.
Take Advantage of Available Deductions
They exist to help relieve tax burdens. Use them for that purpose. This is especially true of expenses related to training camp, like the following:
• Hotels
• Apartments
• Meals
• Rental Cars
Finally, and perhaps most importantly, seek tax help from qualified professionals. Rules and exceptions get trickier by the year. Tax professionals are trained to deal with tricky situations. Let them do the heavy lifting for you so you can focus your attention on pursuits that are far more profitable for you.

If you are looking for a CPA Firm to lower your tax liability legally, call 949-759-5626 and ask for Jerry Morey.

Our firm services businesses and high net worth individuals throughout Orange County.  We have offices in Newport Beach and San Clemente.

What Does the Executor of a Will Do?

Estate PlanningA number of decisions have to be made when a Last Will and Testament is created. The majority of those decisions relate to the disposition of estate assets; however, there are other decisions that must be made as well, including the appointment of an Executor. All too often, the appointment of an Executor is more of an afterthought and is done without giving the choice much thought. A better understanding of the numerous and varied duties and responsibilities of an Executor, however, should point out the importance of taking the time to choose the right person for the job. Among those duties and responsibilities are the following:

  • Securing estate assets – immediately following the death of the decedent, the Executor must locate, secure, inventory, and value all assets in which the decedent had an ownership interest.
  • Opening probate – documents must be prepared and filed, along with the original Will, with the appropriate probate court to open the probate of the decedent’s estate.
  • Notifying creditors – creditors of the estate must be notified that probate has been started. Notice must also be published in a local newspaper for unknown creditors.
  • Reviewing claims – creditors have a specific amount of time within which to file a claim against the estate. The Executor must review all claims and approve or deny the claim. Approved claims must then be paid out of estate assets.
  • Defending the estate – if the Will is challenged, or a creditor whose claim was denied chooses to litigate the claim, the Executor must defend the estate throughout the subsequent litigation.
  • Managing property –the Executor is responsible for managing estate property throughout the probate process. For real property, this may include everything from ensuring that taxes are paid to overseeing necessary repairs or maintenance.
  • Selling property – sometimes, estate assets must be sold to pay creditor claims or to create the required division of assets as called for in the decedent’s Will. When assets must be sold, the Executor is responsible for overseeing the sale.
  • Paying taxes – before probate can be concluded, all personal and estate taxes must be calculated and paid by the Executor out of estate assets.
  • Transferring assets – finally, the Executor is responsible for ensuring that all documents necessary for the legal transfer of estate assets to the intended beneficiaries are prepared and filed, after which the assets are actually transferred to the new owners.

It should be clear at this point that the choice of Executor can ensure that the probate process moves along smoothly and efficiently or can cause probate to turn into a lengthy and costly affair which is why the choice should only be made after careful consideration and contemplation.

Morey and Associates is an Orange County CPA firm located in Newport Beach and San Clemente.  Our practice provides tax compliance services to high net worth individuals and small businesses.