Helio Castroneves, three-time winner of the Indianapolis 500 and professional race-car driver, was embroiled in a long, public battle with the Internal Revenue Service over his income taxes. The Castroneves case puts other professional athletes on notice to ensure that they remain in compliance with their U.S. tax filing obligations. All U.S. citizens and residents have a U.S. tax reporting obligation, irrespective of the geographical source of their income. Professional athletes overseas are not exempt.
Whether it is an American in the Canadian Football League (CFL) or a basketball player playing in the German pro leagues, U.S. tax returns (and host country taxes) must be filed. And in this day and age, when the public often knows how much a player earns, pro athletes can’t hide. IRS agents can access Twitter, Facebook, and overseas team rosters, just like anyone else. A positive aspect of filing is that there are often credits a player can claim, and the potential for a tax refund exists. So, it can pay to file.
For more information or to speak with a tax professional, please call Dr. Karaffa at (804) 363-9684 or visit us at www.prosportcpa.com.