The Super Bowl game last Sunday was a real jaw-dropper, nail biter, tear jerker and what other terms you might want to use. Whether you were for Atlanta or New England, you certainly were on the edge of your seat at times. New England finally pulled it off and won…but did they really win?
The IRS gets up to 39% of the player’s income in taxes, and the players and coaches have to pay their state taxes as well. Georgia is generally 6% while Massachusetts is about 5.3%. Therefore, the players from New England might pay a slightly lower income tax on the Super Bowl, but depending on what other states they played in during the season, they may have higher tax bills. Each state the players play in could impose a state tax on the time they were in the state. This includes play time as well as practice time. The players lucked out in playing the Super Bowl in a state with no state income tax; so, they do not have to pay state income tax in Texas. However, since the winners walked away with $107k and the losers only got $53k, the tax bill may even out.
But we can't forget the non-cash prizes some of these guys won. Prizes are also taxed for income taxes. So any vehicles or other non-cash prizes have to have income tax paid on them.
So the IRS is going to make out really well from the Super Bowl game. Even though Texas does not get any income tax from it, they sure had other taxes, like bed tax for hotels, sales tax on items purchased as well as many other taxes.
Some lay people in Houston got smart and rented their home for up to $35k a night. The IRS code says you can rent your home for less than 14 days a year and not have to claim that rent as income. So those people who got $35k a night (as long as it was less than 14 days per year) made out real well. If you rented your home out for 10 days, that equates to $350k of tax free income. Not a bad deal!! If you rented your house out, you could use the money for anything you want and not have to pay taxes.
Bottom line is…. With proper tax planning you can take advantage of all the tax "loopholes" and plan for those tax expenses that may come up in your life.
Have a Tax Question?