Patrick Mahomes, the quarterback for the Chiefs, is one of the NFL’s highest-paid athletes. His acquisition of money is not without conditions. The most significant one is the variety of challenging taxes he must pay in each state where he competes. The gunslinger will reportedly need to submit seven tax returns this year.
The 2020 rankings of the highest-paid quarterbacks included the Texas native after he agreed to a 10-year, $450 million contract with the team. His source of income includes both the endorsement campaigns he appears in and the money he receives from the NFL. Being a celebrity, Mahomes is the face of many national brands, which contributes significantly to his riches.
Patrick Mahomes Is Entangled in Tax Liabilities
For athletes competing in the NFL, NBA, and MLB, there is a concept known as the Jock tax. When Michael Jordan’s Bulls defeated the Lakers in the NBA Finals that year, it was the beginning of a trend. According to sports investor Joe Pompliano, these are some of the most challenging taxes that athletes must pay. They frequently use shrewd accountants to manage their riches and efficiently file tax returns.
In 1991, The Jock Tax gained notoriety. The Los Angeles Lakers had just been defeated by Michael Jordan and the Chicago Bulls in the NBA Finals. Tweets from Pompliano.
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But during the victory parade, California informed MJ’s accountant that MJ owed $10,000 in taxes for the matches he played in Los Angeles. At first, it was asserted that LA was enraged by Jordan’s success and imposed pointless levies; however, there were established guidelines and standards. Fans reportedly weren’t aware of it. Players have been required to pay a tiny portion of their salary as state taxes ever since the incident.
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It’s interesting that Mahomes’ filing of 7 tax filings in one year went unnoticed. NBA star Kevin Durant will also file 20 taxes in various states and counties. It has been reported that Mahomes will be the next in the line in numerous instances where players had really paid $1 million in taxes.
Other Athletes Who Faced a Similar Situation
Almost all states enforce the Jock Tax principle, with the exception of Florida, Nevada, Texas, Washington, and Tennessee. However, this restriction already applies to some places, including Kansas, Cleveland, Philadelphia, and Detroit. Players like Mahomes are hence qualified for these obligations.
Tyreek Hill was among the well-known figures who made headlines for paying high taxes. One of these factors led him to select Miami over the New York Jets.
7) Floyd Mayweather has employed a similar strategy.
From 2007 to 2017, he held every single one of his professional fights in Las Vegas and saved about $20 million on taxes.
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He reportedly saved close to $2.7 million in taxes last year and will earn $10 million over the following three years, according to reports. Floyd Mayweather, a boxer, used a similar approach to save over $20 million between 2007 and 2017 while spending the entire time fighting in Las Vegas.
