What’s Your Tax Situation?

Every tennis player has her own play style–and her own tax situation. Unlike many other elite athletes, a professional tennis player may win a match in Europe, then travel to an event appearance in Asia to promote a U.S.-based product. This can be exciting, but it can also make for complicated tax situations–and they will be different for each player.

International tax implications are a reality for many tennis players. To complicate things further, taxes are often based on several constantly shifting factors, including where you live, what you earn, where you earn it and your tax residency status. But a few key moves can help you be prepared.

1. Location, location, location

When it comes to taxes, geography matters. No matter where you live, you will most likely incur tax obligations—both filing and liability—in the countries and states where you earn money as a tennis player, whether that’s as a result of winning a match or serving as a paid spokesperson.  

Certain international tax treaties may impact a foreign country's ability  to tax all or a portion of a U.S. athlete’s earnings within that country. You may need to consider not only the country where you’re earning income, but the region, state or city within that country. For example, in the United States, the so-called “jock tax” allows states to levy additional taxes on athletes where they perform services. This can vary from 0% in states like Florida, New  Hampshire and Wyoming, which have no state income taxes on an individual’s earned income, to 13.3% in high-tax states like California. 

Where you make your primary residence can also have a big impact on your overall tax liability, which should be taken into account when considering any permanent moves. 

Planning can help you avoid unpleasant—and expensive—tax surprises. A tax advisor can offer guidance on the tax laws that apply to you long before you need to file, as well as help you file and pay those taxes on time. This is critical when there are multiple deadlines to juggle in your home country as well the jurisdictions where your earnings occurred. Your advisor may even be able to find deductions, credits and strategies that may reduce the impact.

3. Keep the receipts

Maintaining accurate records for your travel, income, expenses and other tax-related information is essential. Your tax professional can help you identify the specific documents you will need, such as:

• Pay stubs and tax forms from entities that paid you 

• Receipts for tennis-related expenses, such as equipment, travel and coaching fees

• Records of commonly deductible expenses, such as mortgage interest and charitable contributions 

• Receipts for medical expenses

Just as the right coach and trainer help you prepare for matches, the right advisor can help you manage tax matters. While hiring a tax professional may seem like an added expense, doing so can potentially reduce what you may owe, as he or she may find potential deductions and credits while creating a plan to manage your tax liability on  future earnings. 

In addition, tax mistakes can be costly, and a good advisor can help you avoid pricey pitfalls. Look for one who has experience working with people who earn income internationally and ideally one who is an expert on the issues tennis professionals often face. 

5. Watch out for scams

As a high-profile athlete, you may be a target for scammers. Practice good cybersecurity hygiene, such as choosing strong passwords for any online accounts you use to contact tax authorities or tax advisors. Don’t click on suspicious-looking emails and be sure to verify the identity of anyone you encounter in online communications before providing them with any personal or financial information.