Economy & Jobs

Do Professional Athletes Get Tax Relief for Paying Fines?

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While we’re all aware of the huge amount of money professional athletes make to play a game, their expenses shouldn’t be taken for granted. Agents aren’t cheap, and neither are the nutrition experts and personal trainers many athletes employ to help them stay at their peak physical condition.

Getting fined by the league or by your team can also be a hefty expense. Matt Barnes of the Los Angeles Clippers was fined $50,000 in May for using inappropriate language toward a fan during the NBA playoffs, and Marshawn Lynch of the Seattle Seahawks made the news in November 2014 when he was fined a steep $100,000 for refusing to speak with the NFL media.

Do professional athletes get any sort of tax relief for paying these fines?

Deducting Fines as a Work Expense

Any U.S. taxpayer can deduct unreimbursed work expenses in excess of 2 percent of their adjusted gross income (AGI) as an itemized deduction. For example, if your AGI is $100,000, you can deduct unreimbursed work expenses in excess of $2,000. Two percent may seem small, but because many of us are reimbursed for most work expenses, this floor is fairly significant.

Professional athletes are typically not reimbursed for their fines, and because they must pay them to continue working, such fines may fit the deduction criteria. While they’re certainly different from paying for parking at the office, they’re an unreimbursed work expense nonetheless—and they’re more likely to break the bank than most average Americans’ daily work expenses.

Who Actually Benefits From the Deduction?

The tax benefit of what a player can deduct depends, of course, on how much he makes. The Kobe Bryants of the world would have to be fined an obscene amount to get over the 2 percent of AGI floor. The previously mentioned Matt Barnes, a former teammate of Bryant, is a good example.

Although Barnes has been in the league for a while and is considered a quality player, he has not typically earned a flashy salary by NBA standards. Barnes’s earnings are now at an estimated career high of $3,396,250 for the 2014–2015 season. Although the NBA season does not align with the calendar year used for income taxes, let’s assume that Barnes earns that exact amount in one calender year. If so, he would be able to deduct anything over $67,925 in fines.

For a player like Barnes, who earns a modest NBA salary and has been fined more than some other players, breaking the 2 percent AGI floor and experiencing some tax relief can prove difficult. The big-time stars aren’t jumping for joy over this deduction because they will likely never get to use it. The players at the lower end of the salary scale may receive some tax help, but it’s certainly nothing to write home about. So, the short answer to whether athletes get tax relief from paying fines? Possibly, but it isn’t as likely as you might think.