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The NBA championship winners and Larry O 'Brien trophy contenders for the 2018-2019 season should receive an extra boost from the league – and an extra kick from the IRS.
Although player salaries do not necessarily cover the extra parts of the winners' calendars, the winning teams will share an amount of money set aside each year by the league – which will be paid to those who will play in the playoffs and to the team that ultimately wins.
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This year's pot is about $ 22 million – up from $ 20 million last season – the NBA told FOX Business. Last year, SBNation estimated that every player in the Golden State Warriors – the team that won the trophy – could have received about $ 221,000 (which assumes the money is split evenly between 15 people). This bonus is higher than the winners of the NFL and NHL.
However, the way bonuses are awarded is not so simple. Additional money is awarded to teams that finished first in their conference, for example, and to the team with the best overall score. The pot is funded by items such as door receipts.
Victor Matheson, a sports economics professor at Holy Cross, told FOX Business that players could receive more money this year, but that money did not count toward the salary cap. He also counted in the league's total pay for the players.
And the bonuses may seem much less important after the imposition of taxes.
The money will be taxed as income, which means that, for the Golden State Warriors, it is subject to the federal rate of 37% and state income taxes (13.3% in California), Tony Argiz, president and chief executive officer of Morrison's accounting firm, Brown, Argiz Farra, told FOX Business.
In Canada, taxes are even higher. US players in Canada pay taxes on their Canadian-born income. Most athletes will be subject to the maximum rate of 53.53% (federal and provincial) on income earned while playing on this field. As residents of the United States, they will also be taxed by the IRS on all income, the maximum federal rate being 37%.
Players on both teams also pay so-called "Jock taxes" or taxes on income earned in other US states. These taxes are usually calculated by dividing the number of workdays spent (workouts and games) in the state by the total number of workdays, but some states only use games. Players pay taxes equal to the highest rate in their country, resident or not. They get a credit for taxes in the low tax state.
For playoff bonuses, players will be subject to taxes in the states where they played throughout the tournament, said Robert Raoila, director of PKF O & # 39; Connor Davies Sports & Entertainment Group, at FOX Business. This means that if the Raptors win, for example, they will pay taxes in Milwaukee and Philadelphia. The Warriors played in Portland and Houston.
The total tax debt is hard to determine at the moment, noted Raoila, because it is unclear where each team will start its season in the fall.
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Overall, players are required to file returns in each state where they play.
"An NBA player needs an accountant just as much as he needs a touch of pen on his average jump shot," noted Matheson.
Nevertheless, the championship bonus is a radical change from the salaries of some of the best players in the league. Golden State Warriors goaltender Steph Curry earns about $ 37.5 million in gross pay each year, while Toronto Raptor star Kawhi Leonard earns nearly $ 20.1 million.
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