For travelling professionals—from athletes, to small-business owners, and even lawyers—multistate tax dynamics are becoming increasingly complicated. Taxpayers performing work across state lines are required to pay state and local income taxes not just where they live, but in every state (and sometimes city). Each jurisdiction claims a share of income based on the services rendered within its borders.
As a result, for taxpayers who frequently travel, tax filing obligations in a dozen or more states, each with their own rules, forms, and deadlines, can create an enormous filing burden. Professionals must allocate their salaries and bonuses on a state-by-state basis, file a patchwork of non-resident returns, and maintain meticulous records—travel logs, itineraries, per-diem statements, credit card receipts, and even GPS data—to substantiate their presence in each jurisdiction. This complex multistate tax issue has come to be known as the “jock tax” because professional (and now college) athletes are often required to file taxes in every state they play games—creating brutal filing obligations.
Take an example. A basketball player who films a commercial in New York may owe New York tax on a portion of that endorsement, even if he lives elsewhere. Resident states typically tax all income, regardless of where it is earned, but only grant credits for taxes actually paid to other states. This means that athletes domiciled in high-tax states like California or New York often pay a residual tax on income earned in no-tax states such as Florida or Texas.
These tax burdens can create headaches even for taxpayers with full teams of advisors who can easily track and document the travel. But for small-business owners and other travelling professionals who may lack such resources, keeping up with all of the requirements from state and local tax authorities can become nearly impossible, opening them up to potential audit risks and steep tax liabilities.
Our Tax team has decades of experience guiding professionals through the multistate tax maze. We offer a comprehensive, proactive approach to get in front of state tax authorities:
In an era of aggressive state enforcement, combined with unprecedented mobility, the “jock tax” is a central—and growing—issue for travelling professionals. Our firm combines deep technical knowledge, innovative technology, and real-world experience to safeguard your interests and optimize your tax position. We invite you to contact our team to discuss how we can help you anticipate challenges, defend your position, and keep more of what you earn—no matter where your career takes you.