The Jock Tax in 2020 is Not Just for Quarterbacks.
February 04, 2021
The Super Bowl is this weekend, and all eyes are on the two quarterbacks. It is always exciting to see how they lead their team under immense pressure on the path to being a champion. As a business owner or an individual taxpayer, you may still be feeling the sting of COVID-19 in your business daily, but did you know that you may also be facing the same "Jock Tax" that professional athletes face? You may be thinking, "Why would I have to think about the Jock Tax when I am not making the same money as Tom Brady?" This is an excellent question for your CPA!
COVID-19 had many business owners and individual taxpayers relocating to a different state temporarily to work, live, and ride out lockdowns or state mandates; consequently, opening the door for potential state taxes in multiple states. Some states tax income earned by residents; other states tax non-resident income earned in that state. For example, if you live and work in two different states during 2020, there is a chance that a portion of your income is taxed in each state.
Since many states have had revenue issues because of the impact of COVID-19, they will be looking for additional untapped revenue streams to help offset their losses to their budget. Just like football players can receive penalties for not following the rules, states may issue penalties for not filing and paying the appropriate taxes. And no one wants to deal with penalties!
Like the two teams that make it into the Super Bowl, you will need a skilled Quarterback to lead your tax offense. At Cambaliza McGee LLP, our CPA team understands the complexity and impact the Jock Tax may have on your 2020 tax situation. If you haven't reached out to us to discuss the impact of working out of state may have on your business or personal taxes, please reach out to us today at (949) 484-8288, so we can help avoid any tax surprises.