Super Bowl Win a Taxing One for Ravens, Fans in Betting Pools
The only things certain in life are death and taxes. This applies to Super Bowl winners too.
Just about every state has some version of a "jock tax" that extracts money from pro athletes who play in the state, reports Forbes. And the same is true in Louisiana.
Nonresidents must allocate a portion of their compensation to the State of Louisiana for any personal services rendered within state borders, according to Louisiana law. So how much will members of the Ravens and 49ers teams have to pay?
Calculating the 'Jock Tax'
Fortunately for Super Bowl players' accountants, there is a simple formula to figure out what proportion of income is subject to Louisiana's "jock tax." According to Forbes, it's:
(Total Compensation) x (Duty Days in Louisiana / Total Duty Days)
For pro football players, "duty days" would include all days from the beginning of the team's official preseason training through the last game in which the team competes, reports Forbes.
For example, let's say you are a third-string wide receiver for the Ravens and earn $1 million a year. If this receiver was in Louisiana prepping and playing in the Super Bowl for seven days and your duty days totaled 180, then you would owe a tax in Louisiana based on $38,888 of income (($1 million) x (7 days/180 days) = $38,888).
Fans Are Also Taxed on Super Bowl Winnings
Not only are million-dollar athletes taxed, but everyone who made money on a Super Bowl bet is also supposed to be taxed on their winnings.
It's estimated that some $90 million was legally wagered on the Super Bowl. Bets could have been placed on things like the length of the national anthem to the color of Gatorade dumped on John Harbaugh.
Casual gamblers are expected to report their winnings on line 21 on federal Form 1040 or Form W-2G. And if you lose, you can deduct your expenses if you itemize your deductions on Schedule A.
Related Resources:
- Federal Taxes (FindLaw)
- Super Bowl Gambling: Illegal or Harmless Fun? (FindLaw's Law and Daily Life)
- Win an Olympic Medal, Expect a Big IRS Tax Bill (FindLaw's Law and Daily Life)
- Browse Tax Lawyers by Location (FindLaw)