PPF, In The News
‘Wild, wild West’
Jarrett Perry is founder and CEO of Player Performance First, a Florida-based accounting firm that specializes in professional sports. He devises and implements strategies to maximize returns for clients, such as advising players on where to spend their bye week or handling the tax implications of suspensions, fines and duty days.
Easley says he learned everything he knows in this realm from his accountant, Jarrett Perry, who frequently gets texts of gratitude from his clients. He gets plenty more messages filled with questions. The NFL season may be long over, but for the CPAs to the stars, this is primetime.
It will be years before the full impact of the new federal tax plan is known, but one thing is certain: High-earning athletes will feel a difference in their wallets. Most will benefit from cuts for top earners but will also lose several common deductions. This will be a particularly complex tax season, especially for athletes switching teams. How they come out will largely depend on where they play. With the help of CPA to the stars Jarrett Perry, here’s how athletes could be impacted in 2018.
For millionaire sports stars, the decline in their marginal rate—from 39.6 to 37%—would be offset by eliminating the deductions on everything from training expenses to union dues to agent commission.
The reality is somewhat more complex. High-earning athletes are dramatically impacted by the new tax bill. But it all depends on where their team plays and where they live. If location, location, location represents the three most important words in real estate, it doubles as the slogan for tax implications.
No matter where they sign as free agents, Bryce Harper and Manny Machado will break the bank. They could sign contracts that guarantee them more than $300 million, perhaps more than $400 million. Their deals will all but ensure that they and generations of descendants are financially set. Yet these two superstars will “take home” significantly higher or lower pay depending on which teams sign them and the applicable income tax rates in the states where those teams are based.
According to the IRS, work-related expenses need to be itemized and actually related to work. Even if you’re famous. Yet, celebrities have tried for ages to elasticize the definition of their work. Despite common myths that celebrities can write off just about anything that helps them maintain their image—and marketability—the opposite is true.
The professional sports landscape is defined by four seasons: the preseason, regular season, postseason and, most lucratively for some, the offseason. But there’s one season that’s often overlooked: tax season.