How Athletes Are Losing Millions on Fines— How to Recover It
The Hidden Tax Trap: How Professional Athletes Are Losing Millions on Fines—and How to Recover It
Dustin Schlaman interviews Jarrett Perry, founder of Perry CPA and an expert in sports tax management, about how fines affect athletes’ taxes and what can be done to fix it.
How Athletes Can Reclaim Thousands in Overpaid Taxes on Fines
Professional athletes are often subject to significant fines for infractions ranging from on-field penalties to off-field conduct. However, what many athletes don’t realize is that they may be overpaying taxes on these fines—potentially losing out on thousands of dollars each year. In this article, we’ll uncover how improper tax reporting can cost athletes dearly and how they can recover these overpaid taxes with the help of experts like Perry CPA.
Understanding the Hidden Cost of Fines
Athletes know that fines are part of the game, but few understand the complexities of how these fines are taxed. According to Jarrett Perry, founder of Perry CPA, fines are reported as part of the athlete’s taxable wages on their W-2. He explains:
“Fines are reported by the teams as a taxable payroll deduction. This means that the fine money never received by the player is reported on the W-2 as taxable wages.”
This can result in an inflated tax bill that doesn’t reflect the athlete’s actual earnings, especially if they don’t receive any of the fine money. For instance, Perry notes that:
“If a player gets a $100k fine, the total cost of the fine with taxes could be closer to $140k, depending on how the team reports it.”
The Tax Cuts and Jobs Act of 2018 also worsened this issue by eliminating the unreimbursed business expense deduction, which athletes previously used to offset the tax impact of fines.
The Real-Life Impact of Incorrect Tax Reporting
Incorrect tax reporting isn’t just a theoretical problem—it’s a reality for many athletes. Perry recalls a particularly troubling case involving one of his clients:
“I had a player that was suspended without pay, but when I reviewed his tax return, I realized that the total tax was more than the net amount he actually made.”
The client had been suspended for multiple games, yet all of these suspended games were still being reported as taxable wages. This caused a significant discrepancy, with the athlete paying taxes on money he never received.
Perry explains the ramifications of this mistake:
“This resulted in a large tax bill for money the taxpayer never received, causing the net check to be less than the total tax owed.”
How Much Money Is Left on the Table?
The financial impact of incorrect tax reporting can be staggering. On average, athletes may overpay by $5,000 to $20,000 annually due to improper reporting. With hundreds of athletes potentially affected across various sports, millions of dollars are being left on the table every year.
“If the reporting is incorrect, then it could result in athletes losing around 40% of the fine amount,” says Perry.
This issue isn’t limited to current players—retired athletes can also recover overpaid taxes by amending previous returns.
Steps Athletes Can Take to Reclaim Overpaid Taxes
If you suspect you’ve been overpaying taxes on fines, it’s not too late to recover your money. Perry CPA outlines the following steps:
- Review Your Tax Filings: Gather all tax documents, including paystubs and W-2 forms, and review them for any fines or suspensions reported as taxable income.
- Identify Potential Overpayments: Check for discrepancies in your tax forms. Were fines or suspensions reported correctly?
- Amend Your Tax Returns: File an amended tax return with the IRS if mistakes are found. You can go back up to three years to recover overpaid taxes.
“We offer a free review of the last two years’ tax returns filed. If errors are found, we would discuss the pros and cons of filing an amended return, and estimate the refund,” Perry adds.
How Perry CPA Can Help
Navigating the complexities of sports taxation is no easy task, which is why specialized assistance is crucial. Perry CPA offers free reviews of past tax filings for athletes. If errors are identified, Perry’s team will work with the athlete to correct the filings and reclaim overpaid taxes. He explains:
“We’ve successfully helped numerous athletes recover their overpaid taxes. One notable case involved an athlete who recovered over $50,000 in overpaid taxes after we corrected the reporting errors.”
Why Athletes Should Choose Perry CPA
Perry CPA stands out for their deep expertise in sports finance and taxation. Their services go beyond tax recovery—they help athletes manage their entire financial picture, from retirement planning to investment strategies. Perry CPA’s personalized approach ensures that athletes not only reclaim overpaid taxes but also optimize their wealth for the future.
“We focus on tax compliance, tax planning, retirement planning, budgeting, and more. Our goal is to build the financial foundation our clients need to be set for life,” says Perry.
Protecting Your Wealth
Jarrett Perry’s insights reveal a critical yet often overlooked issue in professional sports—incorrect tax reporting on fines can lead to substantial financial losses. As millions of dollars are potentially left on the table each year due to these errors, it’s essential for athletes to be proactive in reviewing their tax filings and seeking expert guidance.
Conclusion: Reclaim What’s Rightfully Yours
Athletes work hard for their money, and every dollar counts. Don’t let incorrect tax reporting on fines cost you thousands of dollars. If you believe you may have overpaid your taxes, reach out to Perry CPA for a free review. They can help you reclaim what’s rightfully yours, even if the fines were paid up to three years ago.
Contact Perry CPA Today
Protect your wealth and safeguard your future. Contact Jarrett Perry at Perry CPA for a free review and start the process of reclaiming your hard-earned money.
- Email: jp@perry-cpa.com
- Phone: 561.231.5966
- Location: West Palm Beach, FL
Witten By: Dustin Schlaman
@dustinmiami
www.nufero.com