Send your taxes in — they have to be postmarked (or e-filed) by Tuesday, April 17.
Which is a pain for you and me, but our taxes are not complicated at all compared to those of professional athletes. I’m not saying feel sorry for them — they make a lot of money and hire people to do their taxes for them — but their taxes are a mess.
And it all goes back to Michael Jordan and him celebrating the 1991 NBA championship in California. It was the first of the Bulls six titles, and it was the first of the “jock tax.” Inside Hoops did a great post as a reminder the other day.
As the story goes, soon after the celebrations, parades and excitement of the ’91 Finals, the State of California notified Michael Jordan that he would owe taxes for the days he spent in Los Angeles. In direct response to this new egregious policy, Illinois passed a bill famously known as “Michael Jordan’s Revenge” – imposing income taxes on athletes from California and any other state that imposed a tax on their residents. Many city and state governments followed suit, seizing the opportunity to reach into the pockets of visiting athletes. Today, nearly every state that hosts professional sports teams has enacted their own Jock Tax policy. Even city local taxing authorities such as Cleveland, Kansas City, Detroit and Philadelphia established similar rules independent of the state.
The Jock Tax is a politically expedient tax — you are not taxing people who live and vote in your district (or not enough of them to matter) and it’s easy to say “they make millions.” Where you fall on the legitimacy of that tax really says a lot more about where you fall on taxes and tax rates in general, that’s not a discussion we’re going to get into today.
But because of it, athletes’ taxes are complicated. Like Inside Hoops points out, if you are a Chicago native with a home there but you play for the Knicks, you will owe resident taxes in New York and Illinois, plus the “jock tax” in 20 or more other states. Have fun with that form.
And by the way, coaches are included.