The shared tax troubles of rich athletes and telecommuters

OK, I know it's hard to muster much sympathy for rich athletes. But I also know I'd like to have some of the money "troubles" they have.

However, over at PGATour.com, columnist John Maginnes says I should be careful about what I wish for, especially at tax time.

"Have you ever wondered if rich people hate taxes, too? I got to be almost rich for a year or two and hated them even more," writes Maginnes.

The main problem is the jock tax, which I've blogged about before (here). Here's Maginnes' take on it:

In short, a player has to file a tax return in every state where he
tees it up. If you got paid $1,200 to play the Monday pro-am in
Milwaukee last year and then missed the cut, you still have to file a
tax return there with all your travel receipts and pay taxes on that
income. Play in 25 tournaments in 20 different states and you are
filing 22 tax returns. Don't forget your home state and the Feds.

You can read the rest Maginnes' tax troubles here.

Worldwide jock tax concerns: The jock tax is not limited to the United States. Just ask the footballers (aka athletes we colonists call soccer players) that David Beckham left behind when he joined the L.A. Galaxy.

The Union of European Football Associations (UEFA) has rejected a bid by Wembley to host the 2010 Champions League finals because of a new interpretation of United Kingdom tax laws that would tax players from non-U.K. clubs on money earned while playing in the country.

UEFA has revealed it awarded the final to Real Madrid's Santiago Bernabeu Stadium rather than the new Wembley stadium because of the change.

"The reason is the taxes," said UEFA president Michel Platini. "The concerns we had over players being taxed were minimized by the English FA, but not confirmed by the British Government." ;

UEFA's decision would be like moving our Super Bowl from Franklin Field to Miami because Pennsylvania collects a jock tax and Florida doesn't. (And yes, I know, the chances of a Super Bowl in Pennsylvania in early February are remote, but you get the idea.)

;Telecommuters, too: And some of us don't have to be highly-paid athletes to get hit by another state's tax laws. Heck, sometimes we don't even have to set foot in the taxing state to end up owing.

In fact, telecommuting workers (like me there to the right) are now a prime, and potentially larger sheer numbers-wise, tax target of some cash-strapped states. I blogged about this situation back in February 2006 (here). Now I have firsthand experience with it.

Take, for example, Georgia. Please.

That state's law says it can tax all Georgia-source income. That means if the compensation is issued by a Georgia-based payer, the recipient, regardless of his or her legal tax residence, must pay a portion of the earnings to the Peach State's treasury.

I know this because the hubby works for a Georgia company. The fact that he does his work from his Austin, Texas, home office makes no difference. Each of his paychecks has a chunk withheld for Georgia taxes.

So even though he uses no Georgia services and doesn't clog up Georgia highways getting to the office each weekday, he (and by he, I mean we) lose a sizable amount of our previously disposable income to a state a thousand miles away.

Worse, since we don't have a state income tax here in Texas, we don't even get a chance to take a credit for those Georgia taxes on a state tax return.

And adding insult to injury, Georgia businesses get a tax break for encouraging their employees to telecommute. Workers, however, are not afforded any such reciprocal tax consideration.

Telework legislation pending: I'm not alone in my frustration with this tax. The Telework Coalition keeps track of unfair interstate taxation of telecommuters. And it's still trying to get the Telecommuter Tax Fairness Act passed.

Introduced by Rep. Christopher Shays (R-Conn.) in the House and Sen. Chris Dodd (D-Conn.) in the Senate, the legislation would prohibit states from taxing nonresidents on the income they earn when they work from home. The measure has support in both federal legislative bodies and has garnered endorsements from both telework and taxpayer advocates.

We did deduct the Georgia state taxes on our federal 1040, as that amount was greater than our allowable Texas sales tax deduction. But it's small consolation. ;

And I also hope that IRS return processors don't get confused when they see that we residents of Texas, which has no state income tax, are claiming a state income tax deduction.

I'm already irritated enough with Georgia's greedy hands in my tax pocket. I definitely do not need the added aggravation of it causing problems with my federal return!