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Professional athletes find high earnings and complex taxes

A few months ago, we discussed the lawsuit involving Ohio cities taxing professional football players. The Ohio Supreme Court found that Cleveland's method of taxing visiting athletes was invalid, and they would need to change it. It could also mean some of those athletes may be able to recover some of the excess tax they paid.

While many politicians make a career out of decrying the imposition of taxes, the taxing of professional athletes remains a popular activity for many states and cities in the U.S., including Ohio. 

The advantages to the taxing authority are great. The targeted athletes often earn enormous salaries and live a glamorous lifestyle. By definition, the athletes are all from out of state and opposing teams, which further reduce their sympathy with local fans and ensures they have no vote or influence in the creation of the law.

But the resulting combination of large paychecks and complex taxes, often encompassing numerous state and municipal tax entities and rates, means there exists a large chance of mistakes being made.

This is why so many high-profile entertainers and athletes often make the news with tax woes from various states or the IRS. As one professional hockey player notes, it means your certified public accountant (CPA) is "the most important person in your life."

While most workers in Ohio will never need to worry about the so-called "jock tax," it is useful to keep in mind that whenever you have complex financial arrangements or income, the potential for mistakes in the payment of your taxes is great, and a good tax attorney and CPA can be invaluable. They can help to prevent expensive tax litigation issues from occurring.

Source: pressherald.com, "Pro athletes pay a big price for their success – in taxes," Mike Lowe, June 28, 2015

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