Tax Question*

General Questions
#1

Okay, so I just learned today that NFL/NBA/etc players have to pay taxes in every city/state they play in.

So a good friend of mine is a consultant working (employee) for a firm based in Tallahassee, FL which has no income tax. This friend, has however, occasionally, had reason to travel to other states (Georgia, New Jersey, New York, California to name a few) which do have income tax. Should this friend have filed tax returns in those states for a pro-rata portion of his/her salary? Would the answer be different if he/she was a contractor rather than employee?

  • You (the responder) are probably not a lawyer/accountant. If you are, you are probably not licensed to practice in Florida. Even if you are a lawyer/accountant licensed to practice in Florida, you are not my (or anyone else who views this thread) lawyer/accountant. Nothing you post in this thread constitutes legal/tax advice and anybody who relies on it is a fucking moron. If someone who views this thread has an actual legal/tax problem, they should unquestionably consult a lawyer/accountant who is licensed to practice in their jurisdiction. Did I get it all?
#2

Do they draw a W-2 or a 1099? If W-2, use the states listed on the bottom of it. “Contractor” usually means 1099 but not always.

Of course the second question is “should’ve” vs. “will the IRS catch it or care?” IANA your accountant, but regardless of advice in this thread, a call to one can’t hurt.

#3

One of our Minnesota Senators, Al Franken, was formerly a comedian who appeared in various cities around the country, and was paid in each of them. During the campqign, he was attacked because he (or actually, his accountant) had reported all his income as Minnesota income and paid taxes on it here. His opponents claimed this was tax fraud, and that he should have filed taxes in each state where he appeared.

I presume that the IRS told him that he should indeed file taxes in each state where he worked, because his accountant re-filed his taxes that way. (This actually resulted in him paying less taxes, since many states had lower tax rates than Minnesota, and in some states his income was small enough to be in a lower tax bracket.)

#4

As an employee, I have often had occasion to travel to various states on business for my employer. In every case, the employer paid my travel expenses and my salary while I was working off-site, and the income was always reported in my home state at the end of the year.

In the case of someone getting paid by different companies at each place, I assume the laws would be different. I don’t know how the NFL and NBA work as far as paying their players.

#5

Okay, you guys (naturally) have nailed my confusion. In my friend’s case, the paycheck is always cut from the home office in Florida, even when he/she is working out of state.

Now, I don’t know how the NFL does it, but I would assume that if I play for the Miami Dolphins, it doesn’t matter that we’re playing in New York on Sunday, my check would be cut by the Miami Dolphins (probably to my bank account in Miami). So why is New York entitled to any taxes on that money? And how much are they entitled to? 1/16? 1/365? 4/8766?

#6

Where did you learn of this? Are these municipal taxes rather than state? I’d think if the player was employed by the LA Dodgers, he’d file a federal tax return and a California state tax return.

#7

I heard something about it on tv, then had a bunch of guys at the pub confirmed it (including one who played for FSU is still good friends with several former NFL players). A quick Google found this [WARNING: PDF]:

#8

Some cities (NYC to name one) has an income tax.
But, I have worked for companies based in TX, AR, NY, CA and CO while living in CA, AZ, CO, NJ, CA and CO and always paid taxes to the state that I lived in. One exception was working in both NJ and NY, you needed to figure out how many days that you actually worked in NYC and pay the city tax. Another exception is that if you live a/o work overseas and are paid by a US company you need to file and pay in both places, but for me that was handled by a CPA firm and it was a very complex arrangement and the company netted out the difference in taxes [IOW–they paid the difference]. Google Tax Equalization for info.

#9

Where I work, when we are on travel, we are required to report on our time sheet that the work was done in another state, for tax purposes. I believe they need to report that earned money to the local state, not my home state.

I, however, am not required to fill out an income tax form for that state (I asked).

I believe this is a relatively recent requirement. The email about it was a year or so ago. ETA: although it’s possible it was an email to reiterate an existing policy, not to describe a new policy.

Since professional sports players are paid by their teams, and are not independent contractors, I’d expect their situation would be more similar to mine than to Al Franken’s.

#10

A tax payer should file their tax return based on the W2 they receive from their employer. They should not base it on what they heard from a friend of a friend or what they googled on the Internet.

The IRS does not care where or even if you file a state return.

I doubt the story about the NFL/MLB.

IAAA

#11

It’s absolutely true that professional athletes pay taxes in multiple jurisdictions. NFL players whose teams play in the annual London game even have to pay foreign taxes.

Whether or not you have to file a return in a given state where income was earned depends on the state’s laws. The general rule is yes - though for obvious reasons, enforcement is difficult if not impossible. In some cases, you may not even be entitled to credit taxes paid in one state against those paid in another. New York’s Zelinsky case illustrates how terrifying this stuff can be.

As a general matter, there are good faith exceptions to any criminal penalties that might otherwise apply; reasonable reliance on a W-2 prepared by one’s employer, for example.

This is possibly the most useless on-topic post I’ve ever seen. The OP didn’t ask what the IRS cared about - he asked whether he had to pay taxes in other states, and he might.

#12

If you work for a company, that relationship determines where you file your state taxes (generally it is the state of your residence). It has nothing to do with where the company’s clients are or whether you travel to serve those clients.

The laws about taxing professional athletes are somewhat specific to them. I think it started in California, the other places did it either to be retaliatory or to jump on the bandwagon. Here is a pretty good rundown of how it works.

None of this has any effect whatsoever on the OP’s good friend.

Oh, and *.

#13

Whoops. That should say the general rule is no for employees whose employment relationship arises out of a particular state.

#14

First, it is true that professional athletes do have to pay tax for games played on the road (cites:article from the LA Times about the “jock tax” and webpage from the Louisiana Department of Revenue explicitly on the Athlete tax for PGA, NFL, NBA, NHL, and some minor leagues for an example.)

Second, your friend should find someone who actually knows more about his individual situation and circumstances.

#15

Muni taxes are rather rare. Bigger cities like NYC, and occasional headscratchers like Multnomah County, Oregon. They’d file for each state, and prorate it or take a credit (depending on what the state says) vs. taxes paid to other states.

Anecdotally, I have seen the W-2 of an Oakland Raider. He had a couple pages of his W-2 that just contained additional states.

#16

Thank you for that bit of constructive input. Three of the previous responders referred to the IRS in there answers.

#17

Two, but point taken. I apologize.

#18

I suppose it might be a general rule, but the OP will still have to check with the states involved.

My son is not a professional athlete or even a professional actor, but he has gotten a couple of non-speaking parts in commercials. In one case, he was hired by a New York based company for a commercial that was shot in NJ. The W-2 came with NJ tax information on it. He would have had to pay NJ non-resident income tax but for the fact that his NJ income was below the filing threshold. And that’s probably the reason that many people aren’t affected by non-resident taxes - they don’t earn enough in an individual state to meet the threshold. Professional athletes and entertainers often will , but it’s not impossible for others to meet the threshold

#19

Okay, I can sort of see the idea of people who travel from a work assignment in one state to a work assignment in another state as part of their job.

But what’s the policy on people who travel as part of their job? How are taxes computed for truckers and bus drivers for example? If I got paid a thousand dollars to drive a vehicle from New York to Los Angeles, I might have earned that money in twelve different states. How am I supposed to figure out what percentage of the thousand dollars I earned in each state?

#20

As a matter of fact, states tried to tax the wages of truck drivers passing through, leading Congress to enact 49 USC § 14503 which reads, in part:

49 USC § 11502 provides similar protection to rail workers.
49 USC § 40116(f) covers the state taxes on airline employees and provides that their state of residence and any state where the employees spend 50% of more of their flight time can tax them.