What’s Your Tax Situation?

Every tennis player has her own play style–and her own tax situation. Unlike many other elite athletes, a professional tennis player may win a match in Europe, then travel to an event appearance in Asia to promote a U.S.-based product. This can be exciting, but it can also make for complicated tax situations–and they will be different for each player.

International tax rules are a reality for many tennis players. To complicate things further, taxes are often based on several constantly shifting factors, including where you live, what you earn, where you earn it and your tax residency status. But a few key moves can help you be prepared.

1. Location, location, location

When it comes to taxes, geography matters. No matter where you live, you will most likely incur tax obligations—both filing and liability—in the countries and states where you earn money as a tennis player, whether that’s as a result of winning a match or serving as a paid spokesperson.  

You may need to consider not only the country where you’re earning money, but the region, state or city within that country. For example, in the United States, the so-called “jock tax” means that athletes have to pay taxes in individual states if they earn money there. That can vary from 0% in a state like Florida, New Hampshire or Wyoming to 13.3% in high-tax states like California.  

Where you make your primary residence can also have a big impact on your overall tax bill, so factor that in when considering any permanent moves. 

Planning can help you avoid unpleasant—and expensive—tax surprises. A tax advisor can offer guidance on the tax laws that apply to you long before you need to file, as well as help you file and pay those taxes on time. This is critical when there are multiple deadlines to juggle in your home country as well the jurisdictions where your earnings occurred. He or she may even be able to find deductions, credits and strategies that can reduce the impact, such as pre-paying an expense that you can deduct from your taxes or contributing to an account that offers tax advantages, depending on where you live.

3. Keep the receipts

Maintaining accurate records for your travel, income, expenses and other tax-related information is essential. Your tax professional can help you identify the specific documents you will need, but they may include:

• Pay stubs and tax forms from entities that paid you 

• Receipts for tennis-related expenses, such as equipment, travel and coaching fees

• Records of commonly deducted expenses, such as mortgage interest and charitable contributions 

• Receipts for medical expenses

Just as the right coach and trainer help you prepare for matches, the right advisor can help you manage tax matters. While hiring a tax professional may seem like an added expense, doing so can potentially reduce what you may owe, as he or she can find potential deductions and credits while creating a plan to manage taxes on your future earnings. 

In addition, tax mistakes can be costly, and a good advisor can help you avoid pricey pitfalls. Look for one who has experience working with people who earn money internationally and ideally one who is an expert on the issues tennis professionals often face. 

5. Watch out for scams

As a high-profile athlete, you may be a target for scammers. Practice good cybersecurity hygiene, such as choosing strong passwords for any online accounts you use to contact tax authorities or tax advisors. Don’t click on suspicious-looking emails and be sure to verify the identity of anyone you encounter in online communications before providing them with any personal or financial information.

Taxes, especially across borders, can be tricky. While Morgan Stanley does not give tax advice, a Morgan Stanley Financial Advisor can work with your tax professional on an overall financial plan to help you make sure you keep the right amount of what you earn.

Personalized Financial Advice

Build a plan to help you navigate your complex financial decisions and achieve the future you want, with a Morgan Stanley Global Sports and Entertainment Financial Advisor dedicated to serving the needs of professional athletes.

Start the conversation: whatmovesyou@morganstanley.com