Do pro golfers have to pay state income tax on the prize money they earn?
Masters

Do pro golfers have to pay state income tax on the prize money they earn?


SHARE THIS STORY



The 2018 Masters prize money payout shows the winner's share of the $11 million purse comes in at an astounding $1.98 million. We know Uncle Sam and the Internal Revenue Service will want their share of the money earned, but each of the 50 states also want to claim their piece of prize money through state income taxes -- even if a pro golfer doesn't live there and doesn't earn the majority of their income in those states.

For example, the Masters takes place in Georgia which has both a state income tax and assesses that tax on pro golfers competing in the Masters Tournament. Their top bracket is 6 percent for earners making at least $10,000 in the state in a given year, meaning each player has to pay a 6 percent tax on their earnings as Augusta National pays $10,000 even to players missing the 36-hole cut.



The 2018 Masters winner will get $1,980,000 in prize money, and they'll have to pay $118,800 in state taxes to Georgia. However, they'll have an opportunity to write of the expenses of doing their job in Georgia, which would include transportation, accommodations and the like.

Golfers have to pay state income taxes on prize money earned in any state with a state income tax rate. The only states without a state income tax are Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. The PGA Tour and its major tours under its umbrella do not have tournaments in Alaska, South Dakota or Wyoming.

This is why so many pro golfers choose to live in states with no state income tax, like Florida or Texas. Residents of New Hampshire and Tennessee do not pay state income tax but do have to pay on dividends and income from investments.

At the federal level, prize money earned is treated like taxable income, meaning pro golfers are getting taxed at the normal income rates for their earnings, not against different rates like for capital gains. This is why many players have set up limited liability corporations for their earnings to they can benefit from the passthrough deductions of 20 percent for net income earned, for money paid through these limited liability partnerships, sole proprietorships, and other pass-through businesses.


SUBSCRIBE AND WIN PEAKVISION SUNGLASSES!

New subscribers to our weekly email newsletter from October 15 through December 15 will be entered to win a pair of PeakVision sunglasses of their choice! PeakVision's Dual Zone technology prevents glare while offering unparalleled clarity that's perfect for golfers. The patented PeakVision lens enhances the golfer's ability to see the contours of the greens better with high-definition amber lens which provide three times the definition than the naked eye, and we want you to experience the difference for yourself. (Rules and regulations)


About the author

Golf News Net

Golf News Net

We use the Golf News Net byline sometimes just to change things up. But, it's one of us humans writing the story, we promise.

Sometimes we post sponsored content from this account, and it is labeled as such. We also occasionally include links to products and services from which we could make a small percentage of a sale through affiliate programs.