Call of Duty is one of the best-selling video game titles in history. Activision is holding a world championship tournament in 2020 that offers $1 million in prizes. If you are an e-sports athlete considering competing in this tournament, you may have questions about how your call of Duty esports athletes accountant may handle your winnings when it comes to tax planning.
Tax Planning for Tournament Winnings
There are many factors that could impact the way your Call of Duty esports athletes CPA handles your tax planning for money earned in Call of Duty tournaments. It is good to be clear on the fact that regardless of where on the planet you earn income, as a US resident, Uncle Sam will take a slice through taxation. Here are some factors that could influence the amount you will pay.
1. The Amount of Winnings
If you win tournament prizes that amount to over $600 USD, you will automatically be given the 1099-Misc form to include in your Call of Duty esports athletes bookkeeping. YourCall of Duty esports athletes CPA will use the information on the 1099-Misc when preparing your federal taxes. If your Call of Duty tournament price is less than $600, you may not receive a 1099-Misc. However, you are responsible for including that information in your call of Duty esports athletes bookkeeping for when tax time comes.
2. The Number of Winners
If you are competing as a team, you may not receive a 1099-Misc for your winnings. You may be required to complete other forms so all the tax burden does not fall on you. However, if you receive that total prize from a team competition, then the tax burden will fall on you.
3. Nation Of Residency
Even non-United States residents may need to pay taxes on money won when competing in Call of Duty tournaments in the United States. US residents will need to pay US taxes even if they compete in tournaments in other countries.
International tax responsibility for United States residents and non-United States residents can be complicated. Fusion CPA is home to many experienced Call of Duty esports athletes accountants who understand the unique challenges e-sport athletes face.
Decoding Call Of Duty Esports Athletes Tax Planning
If you participate in Call of Duty Tournaments in your home state, your accountant should file state taxes. State taxes will also need to be filed for most states you compete in. This type of taxation most commonly affects traditional professional athletes. For this reason, it is known as the “Jock Tax.”
However, if you receive a signing bonus for joining a team or a onetime bonus, you may only need to pay taxes in your domicile state. Some esports athlete financial advisers encourage e-sports athletes who are earning a substantial income to consider making their home state Florida, Alaska, or another state that does not have state tax.
Sound Financial Advice from Financial Advisers
We have barely scratched the surface of tax laws that could impact you. A properly prepared tax strategy may help you minimize federal and state taxes and let you hold onto more of your tournament winnings.
Fusion CPA offers esports athletes CFO business advisory. Our firm works closely with e-sport athletes, helping them with their bookkeeping, general accounting, and tax planning. Part of the Call of Duty esports athletes CFO business advisory service we offer is helping you look at your unique financial situation and then tailoring financial plans to meet your current needs. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
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