Kansas City Chiefs: A simple look at the taxes Chiefs rookies will pay

Filing income taxes for the first time in your life can be difficult, and the rookies for the Kansas City Chiefs will soon find out how life as a professional athlete can complicate that.

After all the excitement of being selected in the second or third rounds of the 2018 NFL Draft by the Kansas City Chiefs rookies wears off for the four players who got that distinction Friday night, the rookies will start facing the reality of their new lives. On top of trying to earn a place on the Chiefs’ – or some other NFL team’s – final roster, most rookies will face filing income taxes for the first time in their lives.

For a professional athlete, whose job requires extensive travel in many states, that can be much more complicated than for the average sports fan. Chiefs players not only have to pay income taxes to the IRS and their state of legal residence, but nearly all the states in which they earn money by playing road games as well. That facet has become unaffectionately known as the “jock tax.”

The “jock tax” is a tax levied by almost all states upon the earnings of non-residents on income earned within the state’s borders. For the sake of this illustration, it will be assumed that Chiefs players maintain their legal residences in Missouri. Under that assumption, Chiefs players will spend 20 of their 206 “duty days” for the 2018 season (days from the beginning of preseason activities to the conclusion of the final postseason activities) working in other states, excluding any potential playoff road games and Super Bowl LIII should they qualify.

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Those 20 duty days will be spread between eight different states, seven of which will require the Chiefs to pay tax on the income earned while there. The Chiefs have a regular season road game at Seattle this season, and the state of Washington does not levy a jock tax. The other seven states that the Chiefs will have to file income tax returns for in addition to their state of legal residence are California, Colorado, Georgia, Illinois, Massachusetts, Ohio and Pennsylvania. As mentioned before, if the Chiefs play any road games in the playoffs, that number could go up. If the rookie maintains his legal residence in any of those states, then that would nullify the jock tax in that state for him.

Figuring up the jock tax liability for each state isn’t too complicated. Each road game counts as two duty days in the particular state for NFL players. Chiefs players will thus have two duty days to count for six of the eight states (Washington state being an exclusion for reasons already mentioned) they will play road games in for 2018’s preseason and regular season. California is an exception to that because the Chiefs play three road games in that state this season (against the Los Angeles Chargers, Los Angeles Rams and Oakland Raiders). That means the Chiefs will have to file with California for six duty days.

Using the number of duty days for each state, the players can calculate what part of their income is taxable by those states. For California, with the six duty days, it would be around 2.9 percent of their salary. For the other six states it would be about one percent.

With those percentages figured, accountants for the Chiefs will then calculate how much to withhold from players’ game checks for the particular road games based on the tax rate in the corresponding state. Those rates can vary greatly from one state to the next, and the schedule is unkind to the Chiefs by putting them in California for six duty days.

Putting all the tax talk into projected, simplified numbers is a more effective method of communication. These projections are simplified because they exclude any deductions Chiefs players may claim, like equipment, meals and travel. Unlike in previous seasons, 2018 Chiefs rookies will not be able to deduct their dues paid to the NFLPA because of new federal tax codes.

Another reason these projections are simplified is because none of these rookies have signed actual contracts yet, so it’s unknown how much of their contracts’ values are guaranteed. Additionally, their compensation in some of the years of their deals may be greater than in others.

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Taking Breeland Speaks as an example, the effects of taxes on the Chiefs rookies can be seen. Sportrac projects the total value of Speaks’ contract to be $6.1 million including a signing bonus of $2.517 million. Breaking that value down evenly among the four years his contract will be for as the 46th overall pick, his compensation for the 2018 season would be $1.525 million. It sounds great until the rest of the facts of the situation are considered.

That would immediately place Speaks into the top federal tax bracket, meaning 39.6 percent of that salary would go toward federal withholding. Under the assumption Speaks maintains his legal residence in Missouri, another six percent would go to withholding for Missouri. Kansas City, Mo. levies its own local tax on its residents, but that will be excluded going forward because Speaks may not live within the city’s borders.

Fortunately for all residents, Missouri allows taxpayers to deduct from the amount they owe the state any income taxes paid to other states. Using the number of duty days in each state and the rates provided, that total comes to about $10,267 for 2018.

Subtracting that from the six percent he would owe Missouri, he would have around $81,233 taken out of his game checks for Missouri withholding. Add that to the estimated $603,900 million that would be withheld for the IRS, and that $1.525 million in his first season turns into $829,600 in net value before Speaks has had any medicare tax withheld or paid any union dues. Again, those numbers are just estimates to show the effect of taxes on professional athletes’ salaries.

Next: Kansas City Chiefs: Final 2018 NFL Mock Draft

An annual salary of over $1 million is still much more than most Chiefs fans make, especially at the age of these Chiefs rookies, but most fans pay far less in taxes and file much more simple income tax returns as compared to these new members of Chiefs Kingdom.