If a pro athlete played for a Canadian sports team, such as the Montreal Expos, would they pay American or Canadian income taxes?
I think they pay taxes on whatever country their permanent home is. So an Expos player who lives in, say, Florida would pay American income taxes, a Pirates player from Mexico would pay Mexican taxes, etc.
They pay Canadian taxes. JerH is incorrect; if they make the money here they pay the tax here. (You don’t think the Canadian government would let them make all that money and not tax it, do you?) Since their employer is Canadian their taxes are withheld at source, like anyone else.
It works the other way, too; Canadian athletes who play for U.S. based teams pay the state and U.S. federal tax.
Of course, their salaries are standardized in American dollars, for the sake of simplicity.
The answer to your question appears to be “both”. Many US states, Canadian provinces, and Puerto Rico have a non-resident income tax requirements for income earned while in their jurisdiction. It’s commonly known as the “jock tax” because it affects pro athletes moreso than other professions. Some reading concerning the jock tax:
http://www.taxfoundation.org/press-hyman.html - an HTML overview of the non-resident taxes payed by pro athleyes.
http://www.taxfoundation.org/sr123.pdf - An in depth Adobe file analysis of the tax.
IOW, a pro athlete who lives in Georgia could end up paying income taxes in up to 20 states, Canada, and Puerto Rico - all in addition to Federal income tax.
Ouch!
I think this can be one fo those brain melting things in tax law and changes from country to country and international laws and perhaps even differs state-to-state.
The US determines if you owe taxes based on where the source of the income is. So, if you were a Canadian citizen playing for the Chicago Cubs (thus actually earning your money in the US) then the IRS would feel you owed them taxes on that. This is the reverse of what you suggested but I have even less clue about Canadian tax law than I do about US tax law. I do not know if international agreements manage this or not.
Things can get pretty funky with this though (e.g. a British citizen working for an American company but do all their work for their Canadian branch and travel related to work spending 20% of their time in the US, 30% of their time in Canada and 50% of my time in Great Britain).
Internally in the US it can happen that living in one state but working in another makes things complex. For instance Illinois was getting pissed off at all the Indiana residents who came to Chicago (mostly) to work then paid taxes back in Indiana. IIRC (been awhile since I checked) Indiana residents who work in Illinois (mostly) have to pay some income taxes to Illinois. Makes me wonder if New York does the same thing to New Jersey residents who work in New York City.
Yes, but don’t worry too much – pro athletes don’t pay tax on %100 of their income in 20 states. They pay tax only on what was earned in each state.
A pro athlete in Georgia would pay Ga. state income tax on about 50% of their salary. State taxes on the other 50% of their salary would be paid to other states.
Good thing they make enough to hire accountants.
Actually unless American federal tax code has changed a lot in the last 3 years since I had to deal with it, an American citizen who earns money abroad, is paid by a foreign employer & lives abroad for at least 50 weeks in a year doesn’t owe any federal income tax. I wonder what % of American ball (and hockey) players have bought homes in Canada, and have that as their sole residence? The local/state taxation for playing in US cities would presumably be unaffected.
That could be the bright economic thing to do.
… and wait a minute, you’re telling me they pay the Expos?! 
But it can be a really raw deal. For instance, an athlete who lives in a place without a state income tax (Texas and Florida, for example) will end up paying state taxes on about 50% of his income because half his games are played outside his home state.
That sounds pretty ludicrous to me. “Normal” people who travel on business don’t have to figure out how much of their salary was earned while they were in which state and shell out the appropriate taxes.
When Alex Rodriguez signed with Texas, I remember hearing that he wouldn’t have to pay income taxes on his home game pay (as Doctor Jackson said).
In a related issue, players on Canadian teams, in the NHL, NBA, and MLB, are paid in U.S. dollars. The exchange rate has caused some financial issues for Canadian clubs, because the gate is collected in Canadian dollars.
Yes, they do. At least, they do it to Connecticut residents.