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Taxpayer Advocacy Panel - An NFL Athlete Gets Help

One area where TAP gets involved is where there are problems with reporting income and expenses correctly. This example is an NFL player who also played in Canada.

Taxpayer is a professional athlete who is under contract to a team in the NFL. He did not play for the team during the 2012 tax year. Under terms of his contract, he was not permitted to play for another NFL team but he was allowed to play for a team outside the NFL. He chose to play for a team in the Canadian Football League.

In playing for the CFL, he was not operating as an employee of the NFL team (like say an accountant would who is sent by his or her employer to work at a company overseas). He was an employee of the Canadian team and received the Canadian equivalent of form W-2. He lived and worked in Canada for 5 ½ months from July – November.

Question: what income does he report and where? What expenses does he report and where? Answer: That’s a very good question.

A reading of publications and forms instructions indicates that if the person had been there all year or had played as a self-employed person, his tax preparer would have had specific instructions. But, that was not the case. Clearly, the income has to go somewhere. But where? And are there any deductions? What about travel, room and board while living there?

The tax preparer contacted the IRS for instructions. (TAP does not get involved in whether income should be taxed or expenses deducted – only whether or not taxpayers and their advisors can easily understand what to do and how to do it.) The professional preparer then contacted TAP so that this might be avoided in the future.

Going forward, though, shouldn’t there be information in the publications and/or forms instructions that cover this situation? There is ample content that deals with full-year employment and self-employed persons. It would seem – at least to the man’s tax preparer - that a note should be placed there to cover this contingency. Besides, in today’s global economy, you don’t have to be a professional athlete to have overseas income.

David Hayes, CFP

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