As a Gears of War e-sports athlete, you may have the opportunity to showcase your skills on the competitive stage in front of thousands with countless more watching at home. You may have the ability to earn tens of thousands, if not hundreds of thousands, of dollars annually. However, outside of the glitz and glamour of this profession, there is the less glamorous aspect of Gears of War esports athlete bookkeeping, tax planning, and accounting.
How Will Your E-sports Athlete Income Be Taxed?
If you are a US resident, your Gears of War esports athlete tax planning will be based on the US tax code, regardless of where on the planet you earn your income. Failure to pay taxes and to keep accurate and up-to-date esports athlete bookkeeping could result in penalties, ranging from interest payments to imprisonment for more serious cases.
What Is the Jock Tax? How Will It Impact Your Gears Of War Esports Athlete Tax Planning?
The US government recognizes e-sports players as professional athletes. This may make getting visas for tournaments easier, but it also means that e-sports athletes face some same tax issues athletes in other sports face.
Professional e-sports athletes usually pay taxes in their state of residence, regardless of where on the planet they earned the income. Your esports athlete CPA would include income from contracts, sponsorships, and endorsements in the income they report to the IRS. Your or your CPA may also need to factor in tax on income you earned in non-residence states. This is referred to as the “Jock Tax.” For example, if you live in Minnesota but earn money from a Gears of War tournament in New York, according to N.Y. Tax Law § 631(c), you may have to file taxes based on the percentage of “duty days” you spend in New York. Duty days could possibly include the days you spend doing work for a league or gaming team, team practice, tournaments, or media appearances. Accurately tracking your income based on states can be time-consuming. Here at Fusion CPA, we have a team of esports athlete accountants who can help you, allowing you to spend more time improving your gaming skills.
What Are Your Tax Liabilities on Your Tournament Winnings?
Winning a tournament may earn you a windfall of money. Between 2016 and 2019, 41Gears of War tournaments awarded $3,087,285. The money you win in tournaments is usually subject to US federal taxes, state taxes, and taxes in the countries where the earned income is from. According to the IRS, a person who earns more than $600 should receive a 1099-Misc. This form will even be given to non-US residents who win prizes at US-based tournaments. Non-US residents must pay federal income tax on the money they win. An esports athlete financial adviser may help you make decisions before winning tournaments that may minimize your tax liability.
Getting Practical Advice
At Fusion CPA we understand that as a professional esports athlete you have unique financial needs and unique tax responsibilities. Unfortunately, the nature of your employment may make your cash flow volatile and uncertain. Our esports athlete financial advisers are here to help ensure your tax obligations are being covered. Being a professional e-sports athlete may have been a dream of yours for some time. Failure to plan for financial up and downs, tax obligations, and cash flow may turn that dream into a nightmare. 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.