In 2019, the Six Invitational had a pool prize in excess of $1 million. It’s understandable if you are a professional Rainbow Six Siege esports athlete, who dreams of winning large tournaments with lucrative payouts. However, with large payouts come tax obligations and Rainbow Six Siege esports athletes tax planning. Here are some things you should consider:
Rainbow Six Siege Esports Athlete Tax Planning: Tournament Winnings
If you find yourself competing in a Rainbow Six Siege tournament and winning, your winnings may be subject to tax obligations in the states and countries you earned income from. You or your CPA will need to be familiar with the US tax code, the tax code of the state where the tournament was held in, and any applicable taxes if the tournament was held outside of the United States. Your CPA should also be familiar with the unique intricacies of accounting for Esport athletes
If you are a foreign e-sport athlete competing in the United States, you usually have to pay US income tax. Items that may be included in your Rainbow Six Siege professional bookkeeping could include compensation for the sale of merchandise, endorsements, and tournament winnings. Here at Fusion CPA we suggest that you work with a Rainbow Six Siege esports athlete CPA for the best results in maintaining bookkeeping accuracy. A Rainbow Six Siege esports athlete CPA might file a Central Withholding Agreement for non-United States residents competing in the United States. Typically, non-US athletes competing in the United States are subject to a 30 percent withholding on their gross income. However, if a non-United States e-sport athlete files a Form 13930–A, the athlete may be able to form a withholding agreement with the IRS that can reduce the withholding provided.
Central Withholding Agreements can be complicated documents to complete and they must meet a litany of requirements before the IRS will accept them. Our team of accountants here at Fusion CPA understands the unique challenges non-US resident Rainbow Six Siege esports athletes face in this are. When competing in US tournaments you should be diligently addressing every aspect of the tax code.
Can a Non-US E-sport Athlete Deduct Expenses from Their US Taxes?
Nonresidents may be allowed to deduct certain expenses that relate to income connected to business done in the United States. Itemized deductions that a non-resident e-sport athlete may claim could include charitable contributions, some casualty losses, and state and local income tax.
Non-US citizens who were residents of the United States for the entire tax year may qualify for a standard deduction. The standard deduction may vary according to the filing status of the e-sports athlete.
The Effect of Tax Cuts and Jobs Act On the on Rainbow Six Siege Esports Athletes Bookkeeping
The Tax Cut and Jobs Act can be considered a major overhaul to tax law. E-sport athletes with higher salaries could be negatively impacted by this. For example, after 2018 e-sport athletes can no longer deduct more than $10,000 for state and local taxes. Miscellaneous itemized deductions for unreimbursed work-related expenses are no longer deductible.
A financial adviser who understands esports may help you mitigate the recent tax law hits by helping you set up an LLC for money earned from endorsements. The highest-paid e-sport athletes may benefit from the fact that the highest tax law bracket has dropped from 39.6 to 37 percent, mitigating some losses.
Sound Guidance: Esports Financial Advisers
E-sport athletes, like traditional athletes, have the potential to earn a lot of money in a short amount of time. Their careers can also be short-lived.
Here at Fusion CPA, we understand your working landscape and so offer esports athlete CFO business advisory services like to help you hold onto more of your money to ensure financial stability in the years to come. Our goal is to help you objectively review your financial situation and then create tax planning strategies based on where you are and where you want to be in a few years. Would you like to make the most of the money you earn as an e-sport athlete? If so, we are here to help you reach your goal. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.