Accounting

How athletes can find tax savings with financial advisors

Published

1 month ago

April 24, 2025

For financial advisors and tax professionals, Michael Jordan’s first championship took meaning beyond the beginning of the Chicago Bulls’ legendary dynasty. Hoops fans recall the team’s 1991 National Basketball Association title over the Los Angeles Lakers as the first of the Bulls’ six championships under His Airness and company, a changing of the guard from the dominance of Magic Johnson and his “Showtime” squad.

Among advisors and tax pros working with a coveted client base of professional athletes and entertainers, though, the hardwood history came with dueling state-level duties that California and Illinois levied against each other. California hit the Bulls players and employees with a tax on income they earned in the state, but Illinois came back with its own levies. At the time, the duties earned the monikers, “The Jordan tax” or “Michael Jordan’s revenge.” But today all 50 states charge what has come to be known as a “jock tax.”

The need for planning

Those tax complications, and the significant differences between high- and low-tax states, often require athletes and performers’ certified public accountants to fill out dozens of returns. However, there are many strategies that provide opportunities for savings. These approaches include tax planning around the clients’ home residencies, charitable deductions or credits, and business entities such as an S corporation. Focusing on these available strategies means that an athlete could live in a high-tax state like California — which has a top rate of 14.4% on income — if they’d rather be there than a place with a rate of zero, said Nisiar Smith, founder of Elkins Park, Pennsylvania-based Courtside Wealth Partners.

Nisiar Smith is the founder of Elkins Park, Pennsylvania-based Courtside Wealth Partners.

“While our goal is to mitigate your tax liability, as your advisor, I’m not going to push you to live in those states, especially if you’re not going to have a quality of life,” Smith said in an interview. “If that’s where you want to live, then by all means, we just have to figure out other ways to mitigate your tax liability. … I don’t really advise them on where to live. I start backwards and ask, ‘Where do you see yourself?'”

Questions about residency are “very important” to athletes and entertainers, as is the fact that their tenures at the pro level or ability to fill large venues is often limited to “a relatively short period of time, when you compare it to different industries, to optimize their wealth,” said Frederick Blue, the head of new business development with Wells Fargo Wealth and Investment Management. A pass-through entity or trust planning could bring savings to, say, college athletes benefitting from “name, image and likeness” deals. In light of federal, state and local taxes, a paycheck of $10 million may begin to look much different, Blue noted.

“Net-net, that could potentially be cut in half, all associated with those three taxes,” he said. “So it’s important to look for strategies and work with a tax advisor.”

Potential strategies

The so-called jock tax assesses either a pro rata amount tied to the number of games in a given jurisdiction compared to an athletes’ salary or the state’s duty on a performer’s one-time earnings. Living in a zero-income-tax state can be “a huge win,” but the residency “must be intentional and well-documented,” said Ron Pac, the co-founder and managing partner of Westport, Connecticut-based RIA firm Trivium Point Advisory.

“Residency planning is about more than where you sleep, it’s about where your life appears to be anchored. This will require more than just a Florida license,” Pac said in an email. “Most income will be taxed where it’s earned, so tracking by source is critical. This is where you will see many athletes or entertainers use planning tools such as personal service entities, deferred compensation arrangements or image-right structuring to help address messy tax footprints into a well-managed strategy.”

For athletes and entertainers who may not be acquainted with the challenges of sudden wealth, the budgeting and tax planning should start when they begin collecting the large paychecks, Blue said. Their residency, or domicile, could come up in contract negotiations, as well.

“With some contracts in the tens and possibly hundreds of millions of dollars, seven-figure taxation savings can be realized through the right selection of a domicile,” according to a white paper released last month by Wells Fargo. “While the money you earn day-to-day playing for a team is likely to be taxed as income in the state in which you play, other payments may not. For example, signing bonuses for athletes are generally taxed by the state of the athlete’s residence at the time the bonus is received. So even if you are to play for a team located in a high-tax state, by domiciling in a no- or low-tax state you could save significantly on taxes for the signing bonuses. The language of your contract and the specific state in which you are to play weigh heavily on this analysis and should be overseen by a tax professional.”

Taylor’s taxes

International events may add further complexity to the equation, noted a guide to tax strategies for athletes and entertainers released earlier this year by professional services firm Armanino. On the other hand, a high-grossing performer like Taylor Swift traveling worldwide could deduct business expenses abroad, and athletes’ teams usually pick up other countries’ income tax tabs on their games, the guide notes. Of course, the athletes must still pay the IRS, and they could earn other income during their time overseas.

Back home in the U.S., the state and local tax deduction, incentives for energy efficiency and research and development, rules for equipment depreciation and credits for education or film, television and other entertainment could apply.

“The massive success of Taylor Swift’s Eras Tour didn’t just shatter records for attendance and ticket sales — it showcased the unique tax challenges entertainers and athletes face when working across multiple states and countries,” the Armanino guide said. “With most cities and states on her tour demanding their slice of the pie, savvy tax planning, including the strategic use of tax credits, becomes essential for maximizing profitability.”

Tax considerations deliver a lot of challenges and openings for sophisticated planning around events like the Olympics or legendary feats that result in a contractual performance bonus, Smith noted. To address these highly specific circumstances that affect his clients who are NBA and WNBA players, Courtside is — like many other wealth management companies — building its tax-related services. An upcoming merger will create a new unit of the registered investment advisory firm called Courtside CPA & Associates.

Tough competition for clients

Compared to some of the biggest wealth management firms, Smith saw a “need to be competitive, in terms of what in-house offerings am I giving them” and a way “to be able to offer those tailor-made services,” he said. Those include ensuring that they “plan ahead before signing contracts or booking appearances” for the tax impact and simply keeping track of where the athletes are earning money in the course of their hectic schedules, according to Smith.

“You gotta pay your taxes, period,” Smith said. “Second, you have to keep detailed records of where you work and perform, because that can be an Achilles’ heel for a lot of athletes.”

Advisors seeking to break into work on behalf of athletes or entertainers could consider pursuing the Sports and Entertainment Accredited Wealth Management Advisor, or “SE-AWMA,” designation through the College for Financial Planning, a Kaplan Company, Blue noted. That, “in itself, establishes a level of credibility when you are looking to build relationships in that space,” he said. Then they could follow that up with outreach to agents, business managers, sports attorneys, trainers and, subsequently, to the athletes themselves.

“Network as best you can. Build and cultivate relationships with what we call ‘centers of influence,'” Blue said. “Tell your story. What’s your value proposition to these prospective clients?”

Accounting

XcelLabs launches to help accountants use AI

Published

2 minutes ago

June 6, 2025

Business Finance News

Jody Padar, an author and speaker known as “The Radical CPA,” and Katie Tolin, a growth strategist for CPAs, together launched a training and technology platform called XcelLabs.

XcelLabs provides solutions to help accountants use artificial technology fluently and strategically. The Pennsylvania Institute of CPAs and CPA Crossings joined with Padar and Tolin as strategic partners and investors.

“To reinvent the profession, we must start by training the professional who can then transform their firms,” Padar said in a statement. “By equipping people with data and insights that help them see things differently, they can provide better advice to their clients and firm.”

The platform includes XcelLabs Academy, a series of educational online courses on the basics of AI, being a better advisor, leadership and practice management; Navi, a proprietary tool that uses AI to help accountants turn unstructured data like emails, phone calls and meetings into insights; and training and consulting services. These offerings are currently in beta testing.

“Accountants know they need to be more advisory, but not everyone can figure out how to do it,” Tolin said in a statement. “Couple that with the fact that AI will be doing a lot of the lower-level work accountants do today, and we need to create that next level advisor now. By showing accountants how to unlock patterns in their actions and turn client conversations into emotionally intelligent advice, we can create the accounting professional of the future.”

Katie Tolin

“AI is transforming how CPAs work, and XcelLabs is focused on helping the profession evolve with it,” PICPA CEO Jennifer Cryder said in a statement. “At PICPA, we’re proud to support a mission that aligns so closely with ours: empowering firms to use AI not just for efficiency, but to drive growth, value and long-term relevance.”

Accounting

Accounting is changing, and the world can’t wait until 2026

Published

33 minutes ago

June 6, 2025

Business Finance News

The accountant the world urgently needs has evolved far beyond the traditional role we recognized just a few years ago.

The transformation of the accounting profession is not merely an anticipated change; it is a pressing reality that is currently shaping business decisions, academic programs and the expected contributions of professionals. Yet, in many areas, accounting education stubbornly clings to outdated, overly technical models that fail to connect with the actual demands of the market. We must confront a critical question: If we continue to train accountants solely to file tax reports, are we truly equipping them for the challenges of today’s world?

This shift in mindset extends beyond individual countries or educational systems; it is a global movement. The recent announcement of the CIMA/CGMA 2026 syllabus has made it unmistakably clear: merely knowing how to post journal entries is insufficient. Today’s accountants are required to interpret the landscape, anticipate risks and act with strategic awareness. Critical thinking, sustainable finance, technology and human behavior are not just supplementary topics; they are essential components in the education of any professional seeking to remain relevant.

The CIMA/CGMA proposal for 2026 is not just a curriculum update; it is a powerful manifesto. This new program positions analytical thinking, strategic business partnering and technology application at the core of accounting education. It unequivocally highlights sustainability, aligning with IFRS S1 and S2, and expands the accountant’s responsibilities beyond mere numbers to encompass conscious leadership, environmental impact and corporate governance.

The current changes in the accounting profession underscore an urgent shift in expectations from both educators and employers. Today, companies of all sizes and industries demand accountants who can do far more than interpret balance sheets. They expect professionals who grasp the deeper context behind the numbers, identify inconsistencies, anticipate potential issues before they escalate into losses, and act decisively as a bridge between data and decision making.

To meet these expectations, a radical mindset shift is essential. There are firms still operating on autopilot, mindlessly repeating tasks with minimal critical analysis. Likewise, many academic programs continue to treat accounting as purely a technical discipline, disregarding the vital elements of reflection, strategy and behavioral insight. This outdated approach creates a significant mismatch. While the world forges ahead, parts of the accounting profession remain stuck in the past.

The consequences of this shift are already becoming evident. The demand for compliance, transparency and sustainability now applies not only to large corporations but also to small and mid-sized businesses. Many of these organizations rely on professionals ill-equipped to drive the necessary changes, putting both business performance and the reputation of the profession at risk.

The positive news is that accountants who are ready to thrive in this new era do not necessarily need additional degrees. What they truly need is a commitment to awareness, a dedication to continuous learning, and the courage to step beyond their comfort zones. The future of accounting is here, and it is firmly rooted in analytical, strategic and human-oriented perspectives. The 2026 curriculum is a clear indication of the changes underway. Those who fail to think critically and holistically will be left behind.

In contrast, accountants who see the big picture, understand the ripple effects of their decisions, and actively contribute to the financial and ethical health of organizations will undeniably remain indispensable, anywhere in the world.

Accounting

Republicans push Musk aside as Trump tax bill barrels forward

Published

1 hour ago

June 6, 2025

Business Finance News

Congressional Republicans are siding with Donald Trump in the messy divorce between the president and Elon Musk, an optimistic sign for eventual passage of a tax cut bill at the root of the two billionaires’ public feud.

Lawmakers are largely taking their cues from Trump and sticking by the $3 trillion bill at the center of the White House’s economic agenda. Musk, the biggest political donor of the 2024 cycle, has threatened to help primary anyone who votes for the legislation, but lawmakers are betting that staying in the president’s good graces is the safer path to political survival.

“The tax bill is not in jeopardy. We are going to deliver on that,” House Speaker Mike Johnson told reporters on Friday.

“I’ll tell you what — do not doubt, don’t second guess and do not challenge the President of the United States Donald Trump,” he added. “He is the leader of the party. He’s the most consequential political figure of our time.”

A fight between Trump and Musk exploded into public view this week. The sparring started with the tech titan calling the president’s tax bill a “disgusting abomination,” but quickly escalated to more personal attacks and Trump threatening to cancel all federal contracts and subsidies to Musk’s companies, such as Tesla Inc. and SpaceX which have benefitted from government ties.

Republicans on Capitol Hill, who had — until recently — publicly embraced Musk, said they weren’t swayed by the billionaire’s criticism that the bill cost too much. Lawmakers have refuted official estimates of the package, saying that the tax cuts for households, small businesses and politically important groups — including hospitality and hourly workers — will generate enough economic growth to offset the price tag.

“I don’t tell my friend Elon, I don’t argue with him about how to build rockets, and I wish he wouldn’t argue with me about how to craft legislation and pass it,” Johnson told CNBC earlier Friday.

House Budget Committee Chair Jodey Arrington told reporters that House lawmakers are focused on working with the Senate as it revises the bill to make sure the legislation has the political support in both chambers to make it to Trump’s desk for his signature.

“We move past the drama and we get the substance of what is needed to make the modest improvements that can be made,” he said.

House fiscal hawks said that they hadn’t changed their prior positions on the legislation based on Musk’s statements. They also said they agree with GOP leaders that there will be other chances to make further spending cuts outside the tax bill.

Representative Tom McClintock, a fiscal conservative, said “the bill will pass because it has to pass,” adding that both Musk and Trump needed to calm down. “They both need to take a nap,” he said.

Even some of the House bill’s most vociferous critics appeared resigned to its passage. Kentucky Representative Thomas Massie, who voted against the House version, predicted that despite Musk’s objections, the Senate will make only small changes.

“The speaker is right about one thing. This barely passed the House. If they muck with it too much in the Senate, it may not pass the House again,” he said.

Trump is pressuring lawmakers to move at breakneck speed to pass the tax-cut bill, demanding they vote on the bill before the July 4 holiday. The president has been quick to blast critics of the bill — including calling Senator Rand Paul “crazy” for objecting to the inclusion of a debt ceiling increase in the package.

As the legislation worked its way through the House last month, Trump took to social media to criticize holdouts and invited undecided members to the White House to compel them to support the package. It passed by one vote.

Senate Majority Leader John Thune — who is planning to unveil his chamber’s version of the bill as soon as next week — said his timeline is unmoved by Musk.

“We are already pretty far down the trail,” he said.