For Americans playing in the Canadian Football League (“CFL”), along with learning the playbook, absorbing the foreign culture, and taking care of business on the field, filing taxes should be of paramount concern. Some American imports, however, are playing a dangerous game with the United States’ Internal Revenue Service and the Canada Revenue Agency by not complying with tax laws. Others are potentially passing up valuable opportunities to receive refunds.
As Americans, no matter where in the world we earn our money, we are required to report all of our worldwide income on our U.S. income tax returns. There are provisions in the U.S. tax code, such as the foreign earned income exclusion and foreign tax credits, which provide relief from double taxation for international athletes. Navigating these complex rules require the use of qualified tax preparers, such as Certified Public Accountants (“CPA’s”), who are fluent with the international aspects of the tax code.
Here are a few tips for Canadian Football League players:
1. Make sure you obtain your Form T4 from your team. The Canadian Forms T4 and T4A are the foreign equivalent of the U.S. Form W-2, which shows how much you earned and how much Canadian taxes you paid. CFL players usually receive their Forms T4 by early February of the following year. Also, keep your paystubs as further evidence of what you earned and taxes you paid.
2. Retain a copy of all your CFL playing contracts. These contracts supplement your wage statements and help to detail what you were entitled to get paid during the respective season. The tax authorities sometimes request copies of your playing contracts.
3. Keep a copy of all receipts for any football-related expenses that you incur. This includes any agent fees, training expenses, sports equipment, travel costs, etc. that you incur directly-related to your occupation as a professional athlete. We provide our clients with a questionnaire that guides them on what expenses are possibly deductible; however, it is easier to track these expenses as they occur during the year, as opposed to having to scour bank and credit card statements to try to identify deductions.
Remember to keep in mind that taxes are an obligation of every American. Failing to declare what you earned to the Internal Revenue Service and Canada Revenue Agency is a form of tax evasion…and the penalties can be quite severe, including jail time and hefty fines. Make sure you are in the headlines for your successes on the field and not for being a victim of the global crackdown on people who fail to declare their worldwide income.
For more information or to speak with a tax professional, please call us at (804) 557-2648 or visit www.ProSportCPA.com.