as it did successfully last year<\/a> in Pittsburgh, alongside the NFL and NHL players\u2019 unions \u2014 but agents and financial advisors regularly refer players to tax professionals. Some agencies have in-house accountants.<\/p>\nSteven Piascik, a partner and athletes practice leader in CohnReznick\u2019s Private Client Services, wrote in an email: \u201cEven the most seasoned family accountant might not be prepared to handle 20 different state returns and foreign tax credits.\u201d Because athletes don\u2019t earn their income in one place, and because each place can tax a portion of their income, and because tax law can vary widely from one jurisdiction to the next, well, it\u2019s not hard to see why Piascik and his colleagues are so busy this time of year.<\/p>\n
The first step an accountant might take is to cast a critical eye upon the W-2.<\/p>\n
\u201cThat\u2019s big,\u201d Stripling said. \u201cAre your feet where the schedule says they are?\u201d<\/p>\n
Accountants create a duty-day schedule by having players precisely track their travel. If a player spends an off day at home versus a road city, or rehabs an injury in Florida instead of the club\u2019s home stadium, or goes on a minor-league rehab assignment, the tax implications change. Often, accountants find that the team withheld too much money. Sometimes a player yo-yoing between the majors and minors, where pay is lower, will wind up in the wrong tax bracket.<\/p>\n
Another key factor, as in Torkelson\u2019s case, is residence state. A player employed by the Los Angeles Dodgers or San Diego Padres can\u2019t avoid that more than half his salary will be subject to California\u2019s high tax rate, but establishing residency in a low- or no-tax state can protect endorsement deals and other non-performance-related compensation.<\/p>\n
\u201cWhat you\u2019re trying to avoid is having everything pulled into [a high tax state],\u201d said Thomas Giordano-Lascari, partner in Greenberg Glusker\u2019s Private Client Services Group.<\/p>\n
There are numerous strategies athletes can deploy to spread out income and lower their lifetime tax bill. Stripling leaned into tax-efficient investments and maximized his retirement accounts. Some players set up an S Corp or LLC for endorsement income. Others form charitable foundations. Signing bonuses, deferrals and incentives all bring different tax considerations into play.<\/p>\n
\u201cYou need a pretty good accounting team because it gets so complicated,\u201d Giordano-Lascari said, adding that some players from outside the United States and Canada have additional tax obligations in their home country. \u201cEach state and each country is its own unique animal.\u201d<\/p>\n
A tax professional can also keep tabs on the ever-changing minutiae of tax law. A decade ago, for example, MLB players could write off some costs as \u201cunreimbursed employee business expenses.\u201d<\/p>\n
\u201cThat provision let athletes deduct things like agent fees (often 3 to 5 percent of a player\u2019s contract), union dues, training and conditioning expenses, and travel costs for work purposes,\u201d Piascik wrote. \u201cIn practice, an athlete with a big salary often did benefit from those write-offs.\u201d<\/p>\n
Then, Stripling said, \u201cthat went to a big goose egg.\u201d<\/p>\n
The 2017 Tax Cuts and Jobs Act suspended the deductions of those unreimbursed job expenses for W-2 employees. Some players front-loaded agent fees in their contracts to benefit from the deductions before the tax act was enacted. Afterward, players found themselves with mountains of receipts they no longer had any reason to save. Torkelson paid to have a home gym installed.<\/p>\n
\u201cI was like, \u2018I can just write it off,\u2019\u201d he said. \u201cIt was like, nope.\u201d<\/p>\n
In 2012, before his second big-league season, reliever Jared Hughes sat in front of his computer, plopped a pile of W-2s on the table and opened his tax filing software. He\u2019d started the previous season at Double-A Altoona, climbed to Triple-A Indianapolis and then gotten called up to join the Pirates. Every night for a week, Hughes sat there adding new states to his return, slogging his way through until he finally finished, becoming one of the few major leaguers to say he did his own taxes at least once.<\/p>\n
\u201cAfter that,\u201d he later recalled, \u201cI realized it was time to get an accountant.\u201d<\/p>\n
Now working as the Los Angeles Angels\u2019 director of minor league pitching, Hughes hasn\u2019t touched tax software in over a decade. \u201cI\u2019m not sure I\u2019ll ever go back to TurboTax,\u201d he said this week.<\/p>\n
Tigers reliever Will Vest, a finance major at Stephen F. Austin, is always on his iPad poring over the financials of his two Texas-based LLCs. He keeps his own books.<\/p>\n
\u201cThat\u2019s almost like my escape,\u201d Vest said. \u201cGuys are like, \u2018Why don\u2019t you just get somebody to do that?\u2019 I\u2019m like, \u2018I enjoy it.\u2019\u201d But filing his own taxes? Vest burst out laughing. He leaves that to the professionals.<\/p>\n
Torkelson\u2019s parents no longer file his returns, either. Not that they couldn\u2019t do it, Torkelson said, but they\u2019d want to do it for free, and he\u2019d feel bad for burdening them with that complicated return on top of the 2,300 others that come across their desks. (This tickled his dad, who said it would only take about two hours.) Torkelson\u2019s return is handled by a tax-preparation firm that\u2019s partnered with his agency, Boras Corp, though he still sends a copy to his parents to review.<\/p>\n
For any player still trying to DIY their taxes, and realizing they may be in over their head, Torkelson has a recommendation.<\/p>\n
\u201cTorkelson & Associates,\u201d he said. \u201cI can give you their business card.\u201d<\/p>\n
Maybe he can get a referral bonus from the folks who run the place.<\/p>\n
\u2014 The Athletic\u2019s Cody Stavenhagen, Chad Jennings and Zack Meisel contributed to this report.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"When Spencer Torkelson was 19, his father, Rick, had a realization that later saved Torkelson three-quarters of a…\n","protected":false},"author":3,"featured_media":729438,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[41],"tags":[1266,62,222,67,132,68],"class_list":{"0":"post-729437","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-mlb","8":"tag-mlb","9":"tag-sports","10":"tag-sports-business","11":"tag-united-states","12":"tag-unitedstates","13":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116408152813728197","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/729437","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=729437"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/729437\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/729438"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=729437"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=729437"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=729437"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}