Super Bowl 2014: N.J. Benefits From Big Game’s Jock Tax | newjerseynewsroom.com

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Super Bowl 2014: N.J. Benefits From Big Game’s Jock Tax

TAXX_optBY BOB HOLT
NEWJERSEYNEWSROOM.COM

There will be a whole lot of revenue generated from Sunday’s Super Bowl in East Rutherford, but for the athletes involved, “pay-to-play” in New Jersey takes on an entirely new meaning.

The state of New Jersey will be coming after members of the Seattle Seahawks and Denver Broncos organizations with something known as the “jock tax.”

Yes, New Jersey taxes its professional athletes. NJ.com reports that the state places an 8.97 percent tax on pro athletes from other states that play within its borders. "If a doctor or executive goes to Chicago for a business meeting, nobody cares," said Robert Raiola, a CPA from an accounting firm in Cranford said. "But if a ballplayer goes to Chicago for a game, Illinois will be looking for him to file a tax return."

The jock tax taxes a player’s calendar year income. Peyton Manning, for example, has earned $65,000 in playoff game money so far in 2014, and will gain $46,000 or $92,000 in Super Bowl bonus money, depending on whether the Broncos win. According to Forbes, the state bases their tax on dividing the days spent in the state into the days he spent performing his duties as a professional athlete, then multiplying that amount by his income.

If Manning chooses to play another season, his salary would be $15 million in 2014. The amount he would owe in New Jersey tax would increase if Manning chooses to continue playing due to added duty days.

Some states divide the total number of games an athlete plays in a season by the number played in the state. "They all agree on the fraction; they just don't agree on what goes into the numerator and the denominator," says CPA Ryan Losi, from a Virginia accounting firm, according to Bankrate. "Some jurisdictions treat practices and organized team activities as a working day. Others say that if you travel but don't play, that doesn't count."

Peyton Manning’s brother Eli doesn’t have to worry about any playoff money being taxed this year. But the New York Giant quarterback lives in Hoboken.

"If he were a resident of New York, he'd pay 8.97 percent New York state tax and another 3.78 percent New York City tax on top of that, not only on his wage income but also his endorsements and investment interest," Raiola said, according to Bankrate. "In New Jersey, he only pays 8.97 percent."

 

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