Important Financial Matters Professional Athletes Should Discuss Regularly
By: Justin Linscott, Principal, CPA, CFP®, CGMA, CITP, NFLPA Registered Player Financial Advisor
The financial picture for a pro athlete is a complicated one. Often times their earnings come from various sources, they have residences in multiple states, their contracts and teams they play for may change often. These are just a few examples of elements that make compliance crucial for those working in pro sports. No one that works in this industry can turn a blind eye to their tax burden. It is something that must be constantly monitored by an accountant with specialization in the pro sports industry. This goes far beyond simply filing returns. Here is a list of important tax matters that pro athletes should visit with their accountant on a continuous basis:
Be proactive in your tax planning.
We shout this from the rooftops are our firm. We believe in it with everything that we have. We ask our pro athlete clients to keep us posted on every move they make that could affect their overall tax picture. For example, pro athletes often become involved in various new business ventures. Knowing about these types of ventures allows us to assist with things such as entity type selection and tax consequences.
Keep all accounting partners informed.
Often times, those who work in pro sports have significant money invested in accounts with their financial planners and advisors. The athlete must keep their accounting team informed of these accounts and elements such as dividends, interest, and capital gain income. This way estimated payments can be calculated and made in order to avoid underpayment penalties. This also goes for projected income from investments that would trigger the need to produce a K-1 for the athlete.
With great charity comes great reward.
Many pro athletes are very charitable with their earnings. Their generosity is often met with great tax benefits, but only if the athlete’s accountant is aware of all they are bestowing onto others. Charitable giving is something that should really be accomplished with the help of an accountant as timing can be important when making contributions and gifts. Then the accountant is armed with the right information if the need of a gift tax return arises.
Transparency and teamwork make the dream work.
It is important for pro athletes to note that anything they execute with one advisor, may touch the work that a different advisor does for them. Because of this, athletes should be sure that their accountant, attorney, financial advisor, and agent are all acquainted. This way, they can all work together with the best interest of the athlete in mind.
Contact me today to set your proactive tax planning in motion. I would be happy to assist you.