The Hidden Tax of a Dream Job in Professional Sports

The hidden tax of a dream job in professional sports

I was watching a World Cup match, and the camera panned to the bench. I started counting: coach, assistant coach, someone with a clipboard, two people in polos I couldn’t place, a guy with a medical bag. 

And I started thinking about what a job like that actually looks like. From the travel, the schedule, and the day-to-day reality of following a team across a dozen countries in a single tournament, how does it all affect where they report the income they earn?

And then (because apparently this is how my brain works now) I started thinking about the taxes.

There’s a name for what happens when someone earns income while working across borders. And, it started on a basketball court.

The jock tax: A brief history

Even though we’re talking about the FIFA World Cup, the tax that applies to athletes and professional support staff working across states or countries started in the world of basketball many years ago.

After the Chicago Bulls won the 1991 NBA Championship, the state of Illinois introduced a tax targeting visiting players who earned income while competing there. California, where several of those games had been played, retaliated with a tax of its own. The practice spread, and the informal name stuck: the jock tax. (It’s also called Jordan’s Revenge.)

What started as a way for states to collect income tax from high-earning athletes eventually expanded to cover others who earn income while working across state or national borders. 

Whether taxes are owed depends on local tax laws, tax treaties, and the duration of the work performed.   

The math nobody mentions before signing

Here’s how this tax works in practice.

When someone earns income while working in a state or country, that jurisdiction may have a claim on the portion of their income earned there. For a sports professional traveling across multiple states or countries, that can result in income tax filing obligations in multiple places.

Lena Hanna, a CPA and Enrolled Agent, puts it plainly: “People often assume that they are only responsible for paying taxes where they live, but where their work is actually performed can matter just as much. For traveling sports professionals and support staff, understanding those rules early on can help avoid unexpected filing requirements and tax bills later.” 

For the FIFA World Cup specifically, the international dimension adds another layer of complexity. Different countries have different tax laws and tax treaties with the United States, and staff working abroad may have obligations that go beyond a standard state tax return. 

The travel that makes the job feel extraordinary is the same travel that may create the tax complications.

For a deeper look at how this applies specifically to athletes, this breakdown on the jock tax covers the mechanics in detail.

The travel that makes the job feel extraordinary is the same travel that may create the tax complications.

For a deeper look at how this applies specifically to athletes, this breakdown on the jock tax covers the mechanics in detail.

W-2 employee or contractor: The distinction that changes everything

On the road, many of the worker’s tax obligations are shaped by how they are classified for tax purposes. 

If they’re a W-2 employee of a team or organization, their employer handles withholding across all of the states they work in. That removes some of the administrative burden, but multistate filing still falls on the individual earning the money at tax time, and the multiple state returns add up quickly across a full season of sports travel.

If they’re hired as an independent contractor, the tasks they have to complete are more demanding. They’re responsible for tracking their income by location, as well as paying quarterly estimated taxes to the IRS and the states where the income is earned.  

Although self-employed workers may have more obligations, they’re allowed to deduct their expenses on Schedule C, whereas W-2 employees can’t. This means that the out-of-pocket gear, the mileage, and the equipment costs that came from their own pocket would be deductible. They have to track these expenses to ensure they can support their deduction when it comes time to fling their tax returns. 

The athletes at the top of the roster have business managers and tax advisers sorting all of this out. But most times, the support staff are often figuring it out on their own, after the fact, when the bill has already arrived.

(Check our jock tax athlete breakdown for more on how this affects professional athletes.)

The dream is real. So is the fine print.

Working a FIFA World Cup, traveling with a professional organization, being part of something that matters to millions of people … that’s a genuinely impressive career accomplishment.

But the financial side of sports travel rarely makes it into the job description before that tax bill shows up in April. Awareness and planning are the keys that keep the dream from coming with an unexpected tax bill.

If you’re interested in learning how the jock tax is calculated, its limits, and eight deductions for self-employed athletes, don’t miss the post “The Jock Tax and Tax Write-Offs for Self-Employed Athletes.”