The 2019 FIFA eWorld cup first place winner took home $250,000. The second and third place winners took home $100,000 and $25,000 respectively. If you are a First Player Fifa esports player, you may dream of walking away with prize money like this. It is good to have a realistic view of what large prizes may mean for your Fifa esports bookkeeping, tax planning, and accounting.
Do E-sport Athletes Get to Keep All of Their Earnings?
No. Non-United States resident e-sport athletes playing in the United States and US resident e-sport athletes playing anywhere on the planet may need to factor state, federal, and international taxes into their Fifa esports tax planning.
As a US resident competing in a FIFA tournament, if your winnings are over $600 USD, you may receive a form 1099-Misc. This form will be used by your Fifa esports CPA to determine your federal tax obligation.
Seeing how lucrative e-sports have become, many states also want their piece of the pie. This means that just like professional MLB, NFL, or NBA athletes, you may have to pay taxes in your home state and taxes in each state you compete in. This is known as the “Jock Tax.”
Your Fifa esports CPA will approach your Fifa esports tax planning from different angles if you are considered an independent contractor or if you are an employee. The IRS has clear guidelines to determine your status. At Fusion CPA we have a team of Fifa esports accountants who can explain these regulations to you and their impact on your Fifa esports tax planning.
Understanding Your Fifa Esports Bookkeeping & Taxes
Your bookkeeping will vary based on a few factors. First, are you an employee or an independent contractor? Prior to 2018, employees could deduct unreimbursed expenses on their federal taxes. However, after the major tax overhaul in 2018, these deductions disappeared. That being said, your Fifa esports accountant might deduct unreimbursed employee expenses on your state taxes, depending on your domicile state or the state you earned money in.
The situation is different for independent contractors. As an independent contractor, you may be able to deduct travel, hotels, and equipment that is necessary for your profession, like televisions, computers, headsets, consoles, games, seminars, etc. If you work from home, in this case, compete in tournaments from home, you may expense your home office. As an independent contractor, there are more deductions available to you. That’s why it may be helpful for you to discuss your tax planning with a Fifa esports financial adviser who may help you minimize your tax obligations.
Approach Your Craft from a Professional Angle
As a professional e-sport athlete, playing games is not just your hobby. It’s your business. If you don’t treat it like one, you could make financial mistakes that could impact you for years to come. Here at Fusion CPA our team of small business accountants takes e-sports and e-sports accounting as seriously as you do. Our Fifa esports financial advisers can work to help you develop a financial plan based on your unique financial situation, values, objectives, and goals. We want to partner with you to create a strategic and cohesive professional advisory team. Our goal is to help ensure the seamless implementation of each aspect of your tax planning and wealth strategy needs. 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.