If you are a starting forward of the New York Knicks or a second string left tackle of the San Francisco 49ers, the state taxation of your income as a professional athlete is complex. In general, the issues mirror those faced by an increasingly itinerant workforce in all fields, but aspects of the taxation of professional athletes are unique. Professional athletes are required regularly to travel from state to state to play. Further, for athletes who are members of teams, the home state of the team is often not the home state of the professional athlete. Because each state has the power to tax not only its residents but also nonresidents who work in the state, professional athletes can be required to file and pay income taxes in the various states in which their athletic activities take place. The large salaries of professional athletes and their highly publicized whereabouts, which can often be determined by reading the newspaper, have made professional athletes easy targets for state tax enforcement.
Taxes imposed specifically on professional athletes, such as the retaliatory tax enacted by Illinois after California enforced its nonresident income tax against Michael Jordan of the Chicago Bulls just after the Bulls beat the Los Angeles Lakers in the 1991 NBA finals, are often referred to as “jock taxes.”1 However, the jock tax is not usually a separate tax imposed specifically on professional athletes. Most states with an income tax impose that tax on both residents and nonresidents and have enforced it against well known nonresident individuals.2 As such, while the allocation calculations may differ, the major issues are no different for executives of multinational corporations, investment bankers, actors, entertainers or any person whose job takes him or her to more than one state on a regular basis.
A State’s Right to Tax
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