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For professional athletes, taxes are even more complex

As many basketball and hockey fans in San Diego have seen in the past few days, the free agency period has led to a lot of player movement — and a lot of money being thrown around. Players are routinely receiving eight-figure contracts that lead to millions and millions of dollars being committed to pro athletes. Inherent to this equation is the fact that fans immediately assume that these players pocket these millions with ease.

However, pro athletes don’t have it as easy as those millions make it seem. Since their income is far higher than almost every other person in the country, they obviously pay quite a bit in taxes. At the same time, their profession takes them all around the country (and the world) and, as a result, their taxes are far more complicated.

In some cases, the players pay taxes in a number of states that you couldn’t count on one hand — or even two hands. This means that the players are filing many different forms, and often paying obtuse tax debts to the IRS, to fulfill their tax obligations. They aren’t tax professionals, they are professional athletes. They are in need of knowledgeable tax officials more than anyone.

This isn’t meant to make you feel sympathy for athletes who routinely cash millions of dollars a year. Instead, it is meant to highlight the complexities inherent to the tax system. We’re talking about a convoluted system with rules upon rules upon rules. The way these provisions and laws interact can create mind-numbing, even paradoxical, situations that the everyday person needs help with.

Source: Portland Press Herald, “Pro athletes pay a big price for their success — in taxes,” Mike Lowe, June 28, 2015