E-sports has grown from a fledgling market to a vibrant industry. Thanks to growing coverage on traditional media outlets like ESPN, the industry may break $1.5 billion by 2023. The growing interest in e-sports has led to increased revenue, emphasizing the need for efficient MOBA Smite esports athlete bookkeeping, tax planning, and accounting.
What Smite Esports Athletes Should Know About the US Tax Code
It may surprise players to learn that according to Article 1 Section 8 of the U.S. Constitution, the states can tax nonresidents on their personal income. Professional athletes in the NFL, NBA, and MLB are accustomed to getting taxed in multiple states when they play away games. They refer to this taxation as the “jock tax.” However, this concept may be a part of Smite esports athlete bookkeeping that e-sports athletes may be unaware of.
E-sports athletes usually derive their income from multiple sources. Some are classified as employees, and others are classified as independent contractors. Some may earn money from endorsements, streaming revenue, and prize money. The deductions e-sports athletes can take will vary based on how they earn their income. If an e-sports athlete is an employee, their Smite esports athletes CPA may deduct workplace expenses for tax years before 2018 on their federal taxes. However, changes in the tax law require that as of 2018, unreimbursed employee expenses cannot be included in a federal tax return. Your CPA should be familiar with state tax laws because some states, like California, may allow an e-sports athlete's unreimbursed employment expenses as a deduction on their state return.Paying taxes is inevitable. However, at Fusion CPA our esports accountants are ready to assist you. Our goal us to help create tax strategies to help e-sports athletes, like you, pay the least amount of taxes legally allowable and keep a greater part of their income.
The situation is different for Smite esports athletes who are classified as independent contractors. Since they are self-employed, their esports accountant may deduct several expenses, including equipment used for training such as computers, consoles, monitors, lights, etc. Travel expenses to tournaments, meals, hotels, car rentals, and other ordinary and necessary expenses related to their e-sports profession may also be deducted. Some e-sports organizations and state agencies have put plans in place to ensure that e-sports athletes comply with tax laws. Still, e-sports athletes may need help to understand their tax obligations, especially if they are new to operating as a business.
Your Tax Obligation
The US tax code can be complex and is constantly changing. When you throw on tax laws from various states, it may be easy to get overwhelmed. At Fusion CPA we offer Smite esports athletes CFO business advisory services designed to improve overall business strategy and to maintain compliance with federal and state tax laws. Our esports athlete financial advisers stay up-to-date with the latest tax laws. We offer thorough and personalized tax strategies audit defense, accounting software implementation cash flow management, financial planning, and more. 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.