Question for the Accountants concering Hertl's contract

[crackdown44]

It was the Hertl deal that made me wonder this. No doubt he’ll be taking home more after being traded from California to Nevada

My question is whether or not the portion of his salary retained by the Sharks is still taxed at the California state level?

I’ll hang up and listen

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[Huhu]

Is he counted as a remote worker for San Jose in this case?

Seriously though, I thought you only need to file taxes for the state you reside in. It would be funny if he has to file California taxes for the games he plays there since he's still being paid by a California company.

 

[dire wolf]

I'm not an accountant, but I think the taxes are based on where he earns it, not where the team paying it is located. this is the so-called "jock tax." I think it started with Michael Jordan for some reason. So, you get taxed for all the home games in the state where you play, and you get taxed for all the away games in the states where you play. Someone will correct me if I'm wrong.

 

[BurnabyJoe7]

Not an accountant, but an individual pays income tax according to tax rates in effect and where they live full-time. The portion retained by the sharks will be taxed at whatever state Hertl considers his home, which will likely be Nevada.

 

[cowboy82nd]

Not an accountant, but an individual pays income tax according to tax rates in effect and where they live full-time. The portion retained by the sharks will be taxed at whatever state Hertl considers his home, which will likely be Vegas.

This is not true for athletes and entertainers. Hockey players get taxed by the city and state ( or providence) where they play their games.

 

[crackdown44]

Not an accountant, but an individual pays income tax according to tax rates in effect and where they live full-time. The portion retained by the sharks will be taxed at whatever state Hertl considers his home, which will likely be Nevada.

As mentioned in the post above yours they have the jock tax thing for athletes. If not all of them would have their principal residence in a state with no income tax. Just wondering if the same rules apply to retained salary

 

[tarheelhockey]

I'm not an accountant, but I think the taxes are based on where he earns it, not where the team paying it is located. this is the so-called "jock tax." I think it started with Michael Jordan for some reason. So, you get taxed for all the home games in the state where you play, and you get taxed for all the away games in the states where you play. Someone will correct me if I'm wrong.

I believe this is correct. NHL players are technically paid by the day. Their tax rate depends where they are on a given day. As they travel, their tax rate changes — sometimes dramatically.

For all the moaning about uneven taxes, this means there’s not that much variation in how players are taxed, because they’re on the road half the time. The Leafs are getting that 0% Florida tax rate when they make a trip to play the Panthers and Lightning.

To the OP, I’m not an accountant but I would assume the paychecks are being cut from California but taxed at Nevada rates — except for the road games.

 

[kook10]

To the OP, I’m not an accountant but I would assume the paychecks are being cut from California but taxed at Nevada rates — except for the road games.

I would assume this is the case as well. Contractually he is still getting paid for work performed, although now it will be in Nevada. A buyout would be a different story.

I also suspect that many players have loan-out corporations through which they get paid, which might change the mechanics a bit.

 

[a mangy Meowth]

He'll get taxed in every single state/province he plays games and SJ will pay 17.05% of that amount each time, if I had to guess.

 

[mouser]

It was the Hertl deal that made me wonder this. No doubt he’ll be taking home more after being traded from California to Nevada

My question is whether or not the portion of his salary retained by the Sharks is still taxed at the California state level?

I’ll hang up and listen

Vegas is paying Hertl 100% of his salary.

San Jose is transferring to Vegas an amount equal to 17% of Hertl’s compensation under the salary retention rules. San Jose will not be sending paychecks to Hertl or otherwise directly paying him.

How California tax law handles that distinction I don’t know. I’d guess Hertl isn’t subject to CA income tax for the San Jose retention.

 

[Djp]

It was the Hertl deal that made me wonder this. No doubt he’ll be taking home more after being traded from California to Nevada

My question is whether or not the portion of his salary retained by the Sharks is still taxed at the California state level?

I’ll hang up and listen

I stayed st as holiday inn express

Your taxes are based on where the income was earned where you geographically are located.

 

[filinski77]

I’m a CPA, but don’t specialize in tax, so take what I say with a grain of salt. But here’s my understanding:

Doesn’t matter what team pays his salary. Salary is taxed in the state where the money is earned. So even the salary paid by his old team is still earned in the same location the salary paid by his new team is.

So road games are taxed in the state they play in, and home games are taxed in Nevada. If he has any signing bonuses, those will be taxed in whatever country and state that he is a permanent resident in (this is a way that I believe players in Canadian Markets can use to get away with lower taxes if they are residents of the USA).

 

[karltonian]

Vegas is paying Hertl 100% of his salary.

San Jose is transferring to Vegas an amount equal to 17% of Hertl’s compensation under the salary retention rules. San Jose will not be sending paychecks to Hertl or otherwise directly paying him.

How California tax law handles that distinction I don’t know. I’d guess Hertl isn’t subject to CA income tax for the San Jose retention.

this seems like it

 

[Silky Johnson]

I’m a CPA, but don’t specialize in tax, so take what I say with a grain of salt. But here’s my understanding:

Doesn’t matter what team pays his salary. Salary is taxed in the state where the money is earned. So even the salary paid by his old team is still earned in the same location the salary paid by his new team is.

So road games are taxed in the state they play in, and home games are taxed in Nevada. If he has any signing bonuses, those will be taxed in whatever country and state that he is a permanent resident in (this is a way that I believe players in Canadian Markets can use to get away with lower taxes if they are residents of the USA).

Former Transfer Pricing Specialist here.

This is the correct answer.

All players pay taxes locally on road games. Because the money is taxable as to where (geographically) it is earned.

Also likely a moot point if the money is transfered from SJ to Vegas.

 

[Regal]

I’m a CPA, but don’t specialize in tax, so take what I say with a grain of salt. But here’s my understanding:

Doesn’t matter what team pays his salary. Salary is taxed in the state where the money is earned. So even the salary paid by his old team is still earned in the same location the salary paid by his new team is.

So road games are taxed in the state they play in, and home games are taxed in Nevada. If he has any signing bonuses, those will be taxed in whatever country and state that he is a permanent resident in (this is a way that I believe players in Canadian Markets can use to get away with lower taxes if they are residents of the USA).

My understanding was that this isn’t technically the case, but that the player would be taxed regularly in their place of residence, and different cities/states have “jock taxes” that aren’t always the same percentages as traditional income taxes (for example, California’s jock tax rate is 13.3%, which is higher than the 12.3% rate that is their highest tax bracket) but these taxes would be paid, and then the regular taxes from his place of residence would be adjusted lower to account for those other taxes. It’s essentially the same idea but not quite the same

 

[Regal]

Vegas is paying Hertl 100% of his salary.

San Jose is transferring to Vegas an amount equal to 17% of Hertl’s compensation under the salary retention rules. San Jose will not be sending paychecks to Hertl or otherwise directly paying him.

How California tax law handles that distinction I don’t know. I’d guess Hertl isn’t subject to CA income tax for the San Jose retention.

Yea I imagine for tax purposes, Vegas is paying Hertl directly at the same rate as if there was no retention, so he should be paying the same as he would if there was no retention. The retention would only affect the organization’s finances

 

[Look Up]

Hertl on Zillow right now looking for a Vegas area home.

 

[Golden_Jet]

It was the Hertl deal that made me wonder this. No doubt he’ll be taking home more after being traded from California to Nevada

My question is whether or not the portion of his salary retained by the Sharks is still taxed at the California state level?

I’ll hang up and listen

Figure out the percentage of games played in each state and province for a start,
Where is permanent residency, how long were there.
It’s just super complicated.

 

[hatterson]

On a somewhat related note, are signing/roster bonuses taxed based on principal residence location?

If Hertl (or any other player) gets a June 1st bonus as part of his contract (in addition to base salary that year), he's obviously not playing a game or even taking part in organized team activities on that day, so does it get taxed based on where he's living at that point?

 

[crackdown44]

On a somewhat related note, are signing/roster bonuses taxed based on principal residence location?

If Hertl (or any other player) gets a June 1st bonus as part of his contract (in addition to base salary that year), he's obviously not playing a game or even taking part in organized team activities on that day, so does it get taxed based on where he's living at that point?

I’m not 100% certain on this but I seem to recall that since the signing bonus is generally paid out on July 1 in a lump sum then it’s taxed wherever the player resides at that time

This is why it’s common for wealthier teams to give out the majority of contracts in signing bonuses as it gives the player more flexibility on how they have to pay tax on it

 

[The Marquis]

Not the same states, but a similar situation (state with and without income tax) but I’m one of those people who works in multiple states and can verify that you are responsible for paying taxes in the state you physically work in. The company I work with for is in Oregon, but I work remotely 3 days per week in Washington. I have to file taxes in Oregon for 40% of my salary every year and I pay that to them mostly from my paychecks because my employer did the upfront work that most don’t. Most businesses don’t do that and if the business is located in a state other than you live, you’d file for taxes and prove you worked x hours elsewhere and get a massive refund from that state. That’s how my wife does it since her employer just charges her Oregon taxes for 100% of her hours but she works remotely from Washington 100% of the time.

Travelling pro athletes would have this set up where they are paying taxes all over the place, but they don’t care because they hire accountants to do that for them.

 

[The Marquis]

I’m not 100% certain on this but I seem to recall that since the signing bonus is generally paid out on July 1 in a lump sum then it’s taxed wherever the player resides at that time

This is why it’s common for wealthier teams to give out the majority of contracts in signing bonuses as it gives the player more flexibility on how they have to pay tax on it

I get a bonus lump sum and it’s taxed on the state taxes of the company I work for not where I live… unfortunately. It might be different if I never worked in that state.

 

[crackdown44]

I get a bonus lump sum and it’s taxed on the state taxes of the company I work for not where I live… unfortunately. It might be different if I never worked in that state.

That’s interesting, I didn’t think that was the case. It would be really cool to have a tool where you could plug in like team/residence/salary/signing bonus for a given AAV and have it spit out an approximate after tax value

Due to the jock tax and the implications of the signing bonus I feel like we tend to overstate the benefit of playing in a no tax state. Not to say there isn’t one but I feel it’s not as big as people think if you have a good accountant

 

[TheOrganist]

Not the same states, but a similar situation (state with and without income tax) but I’m one of those people who works in multiple states and can verify that you are responsible for paying taxes in the state you physically work in. The company I work with for is in Oregon, but I work remotely 3 days per week in Washington. I have to file taxes in Oregon for 40% of my salary every year and I pay that to them mostly from my paychecks because my employer did the upfront work that most don’t. Most businesses don’t do that and if the business is located in a state other than you live, you’d file for taxes and prove you worked x hours elsewhere and get a massive refund from that state. That’s how my wife does it since her employer just charges her Oregon taxes for 100% of her hours but she works remotely from Washington 100% of the time.

Travelling pro athletes would have this set up where they are paying taxes all over the place, but they don’t care because they hire accountants to do that for them.

On a given NHL payday (let’s say players are paid bimonthly) will the check stub itemize all the tax withholdings based on a given NHL schedule in a two week period? So if let’s say the Blues had a 3 game road trip through California during a given pay period, will the check stub reflect the “jock tax rate” withholding for the State of California?

 

[FrozenKing18]

Hertl on Zillow right now looking for a Vegas area home.

Homes in Vegas are actually quite nice and has great value. At least from what i've seen in zillow lol compared to my area here in CA. f***ing 3 bedrooms cost north of a million.