If you are a professional athlete, you spend a great deal of time honing your technical skills and keeping your body in tip-top shape so you can win in the sport that you play. It’s imperative that you focus on the finances as well, and don’t fumble the ball when it comes to tax deductions. Whether you are a rookie or a well-seasoned veteran, taxes are important. Here are some tips to keep your tax game tip-top.
State taxes. Where you live makes a difference. Athletes domiciled in states that don’t impose income taxes, such as Florida, Nevada, Texas, and Washington, save having all their income taxed at the state level, though states, where you play at athletic events, may tax you on that portion of the income you earn while there. So if you have a choice of where to live or play, choose a state with low or no income taxes.
Dues and Fees. If you pay dues to belong to a professional organization or league, or even to an athletic club where you work out every day to keep in shape, those likely are business deductions. Fees you pay to an agent or a manager are tax-deductible business expenses. Fees you pay for your tax software or your accountant for business are tax-deductible business expenses, and fees paid to an investment advisor to manage your investments are tax deductible investment expenses.
Therapy. If you get massage therapy or stretching workouts to enhance your ability to play, those costs may be tax-deductible business expenses. Yoga classes to increase flexibility and meditation classes to improve your focus may also be deductible. Review all your expenditures to see which ones may qualify as expenses of your business.
Equipment. Whether your fitness equipment consists of racquets, balls or boards, they are all tools of your trade of being an athlete. Shoes that you wear on the field or court are probably deductible, as is your workout apparel. And the cost of transporting that equipment to games and workouts is also deductible.
Travel. The cost of meals, lodging, and transportation while on the road traveling from game to game are tax deductible, and even the cost of temporary lodging while engaging in business activities such as attending a month-long training camp.
Weekend warrior expenses. If you are a weekend athlete who plays sports for fun, you may not be considered to be in the business of being an athlete. If that’s the case, your expenses may be tax deductible only to the extent of the occasional money you make from participating in (and winning) athletic endeavors.
Don’t worry about knowing these tax rules. TurboTax will ask you simple questions and give you the tax deductions and credits you deserve based on your answers.