This may be more of a story about tax laws than football, but Peyton Manning has a financial incentive to win in Sunday’s Super Bowl game.
Both teams have bonuses for making it to the Super Bowl. Winning has an even higher bonus. Players will get an extra $92,000 and the losing team’s players will receive $46,000.
Yet as pro-athlete CPA K. Sean Packard writes in Forbes, Manning could have to pay a huge amount of taxes on those bonuses depending on whether he returns for another season next year.
New Jersey calculates tax rates based off a person’s time in the state and their total salary for the year. Out-of-state athletes pay a 8.97 percent tax in NJ, according to the Star-Ledger.
If Manning continues to play for the Broncos, New Jersey would tax his income for next year — even though he hasn’t earned it yet.
“If Manning is able to play next season, his New Jersey income tax would be $46,989 on $92,000 for winning the Super Bowl, or 51.08%. If they lose and he is able to play in 2014, he will pay New Jersey $46,844 on his $46,000, which amounts to a 101.83% tax on his actual Super Bowl earnings in the state—and this does not even consider federal taxes!,” Packard writes.
Keep in mind that Manning is due $15 million next season so his accountant will likely not have trouble finding funds to cover his tax obligations.
Many pro-athletes file a dozen tax returns for the travel they do for games.
If the Super Bowl had gone to Tampa or Miami, both starting quarterbacks would have paid nothing to Florida in taxes —a big reason why players love playing there.AlertMe