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State of California Franchise Tax Board

Athletes

The Sports Program ensures that nonresident professional athletes file California returns and the correct California source income is reported by those who file returns voluntarily.


For questions or comments e-mail : WSCS.GEN @ftb.ca.gov
Subject Line: Sports Team

Frequently Asked Questions

  1. Why does the state need a Sports Program?
  2. How do team sport nonresident professional athletes determine their California source income?
  3. What is the "duty day" method?
  4. What about the various bonuses the athletes get such as performance and signing bonuses?
  5. What about the taxes I have to pay to other states or countries?

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1. Why does the state need a Sports Program?

The Sports Program exists to help nonresident professional athlete taxpayers determine their California source income.

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2. How do team sport nonresident professional athletes determine their California source income?

In order to determine the California source income of a nonresident team sport athlete, the "duty day" method should be used. 

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3. What is the duty day method?

A "duty day" is defined as "any day services are performed under the contract from the beginning of an official preseason activity until the last game played".  The "duty days" in California are then divided by the total "duty days" to create a ratio.  This ratio is then multiplied by the total compensation.  This then is deemed to be the California source income.

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4. What about the various bonuses the athletes get such as performance and signing bonuses?

Performance bonuses should be included in the income to be allocated within and without California if any of the conditions to receive the bonus were met or partially met while performing services in California.  The signing bonus issue is dealt with on a case by case basis with an examination of the wording of the contract.  If services must be performed to receive or keep the signing bonuses and if any of those services are performed or partially performed in California, then the signing bonus should be included in the compensation to be allocated within and without California.

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5. What about the taxes I have to pay to other states or countries?

California does have reciprocal agreements with the other states to allow credit against the tax liability. The availability of these credits depends upon your state of residence. You should see your tax professional regarding this issue. California does not allow credit for taxes paid to foreign countries.

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