Still celebrating that Eagles win? Were you one of the many “anyone but the Patriots” fans watching the Super Bowl? It might surprise you to learn that even though they lost, the Patriot team members are going to owe taxes to the state of Minnesota, which has one of the nation’s highest tax rates. In fact, the New England players will owe taxes in every state (and sometimes city) that they play in this year, in addition to owing taxes in their home states. MSN has a fun article on the tax implications of playing in the Super Bowl that you can find here .
Of course, this is not a special treatment saved for “teams we love to hate.” All professional athletes - even the Eagles - as well as professional musicians and other entertainers routinely pay taxes in the states where they play and perform. However, ordinary folks also face multi-state taxation. Taxpayers who move from one state to another during the year may owe taxes in both states. Students attending an out-of-state college who worked while at home and at school are also subject to taxation in both states. Others who might owe taxes in multiple states include travel nurses and construction workers. Some taxpayers have jobs that send them out of state for temporary work assignments; these workers often end up with W2s showing withholding in multiple states. Finally, taxpayers who live in one state but have rental houses or farmland in another state will have to file tax returns in both states.
Each state establishes its own tax regulations. This means filing requirements, deductions, credits, etc. can vary quite a bit from state to state. For example, in Pennsylvania, anyone with taxable income over $33 must file a tax return! A few states have reciprocal agreements with bordering states to minimize paperwork. Most states allow at least partial credit for the taxes paid to another state, but the formula for doing so varies widely from state to state. As you can see, this area of taxation can become very complex very quickly.
As with professional athletes and entertainers, each taxpayer’s case is unique, and special circumstances can impact the tax return’s bottom line. And like the professionals, taxpayers who must deal with multiple states should seek assistance instead of tackling this complex situation on their own. At Down South Accounting & Tax, we are experienced in preparing tax returns for all states, so let us handle your multi-state return while you continue celebrating an Eagles victory!
