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Posted by Dick Adams on November 30, 2006, 1:22 am
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patrick.20414@gmail.com wrote:
> I read in the newspaper that should baseball player Vernon
> Wells sign with the Texas Rangers for roughly $16 million to
> $18 million per year, he would save roughly $10 million /
> year in tax savings considering he makes his principal home
> in Texas and Texas has no state income tax.
>
> Currently Vernon Wells plays baseball in Canada. Can a pro
> sports player not keep his tax advantage by designating his
> principal residence in Texas but at the same time playing
> for a sport's team outside the state of Texas?
The $10 million is a typo. Baseball players are taxed in
the State in which they live and in the States in which they
play. So with the Rangers, Wells would play half his games
in Texas and that means a healthy portion his salary would not
be subject to State income tax. I suspect any games he plays
in Florida would be treated the same.
Texas goes to Spring Training in the Grapefruit League which
is in Arizona. Some of his salary may be taxed there.
Dick
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Posted by William Brenner on December 1, 2006, 9:35 pm
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Dick Adams wrote:
> patrick.20414@gmail.com wrote:
>> I read in the newspaper that should baseball player Vernon
>> Wells sign with the Texas Rangers for roughly $16 million to
>> $18 million per year, he would save roughly $10 million /
>> year in tax savings considering he makes his principal home
>> in Texas and Texas has no state income tax.
>>
>> Currently Vernon Wells plays baseball in Canada. Can a pro
>> sports player not keep his tax advantage by designating his
>> principal residence in Texas but at the same time playing
>> for a sport's team outside the state of Texas?
> The $10 million is a typo. Baseball players are taxed in
> the State in which they live and in the States in which they
> play. So with the Rangers, Wells would play half his games
> in Texas and that means a healthy portion his salary would not
> be subject to State income tax. I suspect any games he plays
> in Florida would be treated the same.
>
> Texas goes to Spring Training in the Grapefruit League which
> is in Arizona. Some of his salary may be taxed there.
Grapefruit League - Florida
Cactus League - Arizona
Texas - Cactus League
Bill
Moderator:
I made a mistake on a Baseball question? !@#$%^&* Wow.
Texas plays in the Cactus league which is in Arizona.
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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Posted by Katie on November 30, 2006, 1:22 am
Please log in for more thread options patrick.20414@gmail.com wrote:
> I read in the newspaper that should baseball player Vernon
> Wells sign with the Texas Rangers for roughly $16 million to
> $18 million per year, he would save roughly $10 million /
> year in tax savings considering he makes his principal home
> in Texas and Texas has no state income tax.
>
> Currently Vernon Wells plays baseball in Canada. Can a pro
> sports player not keep his tax advantage by designating his
> principal residence in Texas but at the same time playing
> for a sport's team outside the state of Texas?
It all depends on the facts and the law of the jurisdiction
where the team that employs the player is located.
As Paul noted, professional athletes pay tax on an
apportioned share of their earnings to every state where the
team plays games or where it engages in other activities
such as spring practice, unless the state has no individual
income tax or has a reciprocal agreement with the state
where the athlete resides. The proration is usually done on
a "duty days" basis -- counting all days from the beginning
of spring practice to the last playoff game in the
denominator, and all days in the state in the numerator. Of
course Texas has no reciprocal agreement with any other
state, since it has no individual income tax.
There are no special rules for professional athletes similar
to the rules for military personnel, who retain a domicile
in the state where they lived when they joined the service
unless they take specific action to change it. The military
rules are prescribed by federal law (the Servicemembers'
Civil Relief Act of 2003, successor to the Soldiers' and
Sailors' Civil Relief Act of 1940).
Each state defines residence for income tax purposes by its
own rules. So if a player who originally lived in Texas was
hired by a team in Illinois, and moved his family to
Illinois, bought a house there, sent his kids to school
there, etc., he would probably become an Illinois resident
for tax purposes even if he still considered his domicile to
be in Texas. Under Illinois law, he would be present in the
state for a purpose that is not temporary or transitory
(under an employment contract that could be renewed
indefinitely), and therefore a tax resident of the state.
On the other hand, if the same player kept his home and left
his family in Texas, and traveled to Illinois for games and
practices there, he might not become an Illinois resident.
Illinois would take all of the facts and circumstances into
consideration in making that determination.
So ... it depends.
Katie in San Diego
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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<< to this newsgroup as well as our anti-spamming policy >>
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Posted by Mark Wiley on November 30, 2006, 1:41 am
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> I read in the newspaper that should baseball player Vernon
> Wells sign with the Texas Rangers for roughly $16 million to
> $18 million per year, he would save roughly $10 million /
> year in tax savings considering he makes his principal home
> in Texas and Texas has no state income tax.
>
> Currently Vernon Wells plays baseball in Canada. Can a pro
> sports player not keep his tax advantage by designating his
> principal residence in Texas but at the same time playing
> for a sport's team outside the state of Texas?
I once saw an article with Shaquille O'Neal's accountant in
it, and yes, you are correct that the pro athlete must file
a return in every state that he plays in. The accountant had
a stack of returns nearly two feet high, ready for O'neal to
sign. If I could only get ONE of those clients. :)
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Katie on December 2, 2006, 8:22 pm
Please log in for more thread options Barry Margolin wrote:
> Is this only true for occupations where you spend a
> significant portion of your time away from the state of your
> main office? If I normally work in Massachusetts, but my
> company sends me to work in the California office for a
> couple of weeks, I don't expect to pay California taxes for
> the earnings during those weeks. An athlete probably only
> spends 3-4 days per year in any particular away game state,
> less than a ordinary executive traveling to another company
> office for a week or two -- why does the athlete have to pay
> taxes in those states, but not the executive?
>
> However, baseball players in northern states *do* spend
> several months in the south for spring training -- it would
> make sense for them to pay taxes in the southern state
> during that time.
It applies to the executive as much as to the athlete. If
your company sends you to work in the California office for
a couple of weeks, and your total gross income exceeds
California's filing requirements, you are subject to
California tax on your earnings from services performed in
the state. This is true of everybody. Of course, if you
work out of state only on rare occasions and for short
periods of time, it is unlikely that anybody is going to get
excited about it. Some states have de minimis rules; others
do not. EVERY state that imposes a comprehensive individual
income tax asserts jurisdiction to tax nonresidents on
income from sources in the state, which includes income from
services performed there.
In the late 1980's the national accounting firm I was
working for at the time was "caught" by the State of
Colorado. They had sent consultants (installing ERP
systems, I think) into the state for extended periods of
time working on projects there, and had not withheld
Colorado taxes. There was talk of criminal prosecution.
You can imagine how quickly the firm got into compliance!
From that time on, we were all required to show on our time
sheets not only what client or project we worked on, but
where we did the work. And the firm withheld for every
state even if we spent only a day or two working there.
I believe all the national and most of the regional
accounting and law firms are in compliance nowadays, and
most large corporations as well. A lot of smaller businesses
have not got the message. I talked to some folks recently
from a consulting firm in Atlanta that has been sending
people on contracts lasting 9 months or longer all over the
U.S., and withheld only Georgia taxes on everybody. I
referred them to a state and local tax consulting firm in
their area that will be able to help them get into
compliance.
Katie in San Diego
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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