A player in the National Hockey League was this week suspended for 20 games for high-sticking another player in the head.
Like most of the other major sports leagues, the amount of pay this player loses during his suspension is donated to charity – in the NHL’s case, to the NHL Player’s Association program for struggling old-timer players.
So, are lost wages from such a suspension, or a fine, of a big-time sports player tax-deductible?
It seems to be very similar to a charitable deduction, albeit forced.
this doesn’t sound right to me: a FINE, as I understand it, might be deducted from his paycheck HOWEVER, it was still income. kinda like my payments for my car loan is reduced “income” in a sense, but in no way does it reduce my income as far as the IRS is concerned.
His INCOME as far as the IRS is his GROSS wages before any deductions (child support, taxes, garenshments etc).
This, I would suspect would be treated like a garnishment, and not effect his tax level at all. After all, it’s described as a FINE, not as a “pay reduction”.
No…there’s lost income here, not a fine. On suspension, he does not get paid…he doesn’t have to pay a fine every game…he actually doesn’t get paid. Now, if this had just been a $120,000 fine, then yes, he’d have made that money, but he’s losing the money due to suspension, not a fine.
BUT, Jman, per the agreement with the NHL (which I assume is very similar to other professional sports leagues), those wages he is not paid go to a charity.
Would this then be the NHL’s donation to the charity, perhaps?
It seems to me the question may be harder to answer regarding pro sports fines.
The NFL has fined numerous players this year for overly-aggressive hits. Although it is called a fine, it isn’t one in the sense of a legal fine you and I would pay. I’m virtually certain that money goes to some charity agreed upon by the league and the Players Association.
I’m wondering if the transgressor can claim a $20,000 donation to charity.
Charles Barkley brought this up a couple years ago with the IRS. The IRS agreed that yes indeed they are deductible, but only if they go over a certain percent of income. Seeing as how many athletes make several million dollars, one would have to rack up quite a bit in fines before it would be allowable.
milo: again- from your freindly tax expert. No, they are NOT contributions. Yes, they are deductable as a “misc itemized deduction”, which they indeed must exceed 2% of your AGI- like elwood said.
Just a suspension, donated to Charity or no, is a reduction in income, not a deduction.
In all these cases, it is not the finee who is making the contribution, but the 'finer".