As football season is officially winding down, the IRS review of NFL player returns does not. About 20% of pro-football players could be audited this year. Among the deductions that the IRS is taking a closer look at are: agent fees, union dues, meals, entertainment and other sport related expenses like training and conditioning expenses and locker room, clubhouse and union dues.
While all of these expenses are deductible, players are required to have very detailed records of such expenses and unfortunately NFL players are not known to keep such detailed records. A simple credit card statement will not do. Often times the IRS wants to see an actual receipt or invoice for the purchase as well as an actual copy of the cancelled check.
Further, adding to the complication, players, much like regular tax payers are only given a 90 day period in which to respond to an audit notice. This means if a player gets a notice during the regular season it may make it very difficult for them to comply with the request. If a player is out of town playing games, that makes it even harder.
Failure to provide documentation for an audit can lead to an increase in tax liability, tax liens filed against the player, loss of tax refunds and can affect a player’s credit.
What can an individual, non-professional athlete take away from this? The need to keep very detailed records. Keep copies of actual receipts and even go so far as to take notes on receipts and checks as to account for what each one is for. Accountants for the athletes are advising them to invest in a scanner and software that helps them keep track of all of their expenses. That way if an NFL player does receive an audit notice, he will be properly prepared. While that might not be necessary for you, it might be something to consider.
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