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For players competing internationally, along with learning their new teams, absorbing the foreign culture, and taking care of business on the court, filing taxes should be of paramount concern. Some Americans, however, are playing a dangerous game with the Internal Revenue Service by not complying with U.S. tax laws. Others are passing up valuable opportunities to receive refunds from their host countries.

As Americans, no matter where in the world we earn our money, we are required to report all of our worldwide income on our U.S. income tax returns. There are provisions in the U.S. tax code, such as the foreign earned income exclusion and foreign tax credits, which provide relief from double taxation for international athletes. Navigating these complex rules require the use of qualified tax preparers, such as Certified Public Accountants (“CPA’s”), who are fluent with the international aspects of the tax code.

A few tips we give our international basketball (FIBA/USA Basketball) clients are as follows:

1. Make sure you obtain your official foreign earnings statements from your team. This form is the foreign equivalent to the U.S. Form W-2, which shows what you earned and how much in foreign taxes were paid on your behalf. For example, BEFORE you come home after the 2013-14 season, make sure your team provides you with your 2013 annual wage and tax statement. These are usually available by the end of January. Since the 2nd half of the season ends early in the year (2014), for that partial year, be sure they give you at least your last paystub from the team, showing what you earned thus far that year, as well as the taxes paid year-to-date. Then after year-end, obtain that year’s (2014) official foreign earnings statement. Always keep all of your paystubs to prove what you earned and the taxes paid.

2. Retain a copy of all your overseas playing contracts. These contracts supplement your wage statements and help to detail what you were supposed to get paid in the respective calendar years.

3. Keep a copy of all receipts for any basketball-related expenses that you incur. This includes any agent fees, training expenses, sports equipment, travel costs, etc. that you incur directly-related to your occupation as a professional athlete. We provide our clients with a questionnaire that reminds them what expenses are possibly deductible; however, it is easier to track these expenses as they incur during the year, as opposed to having to scour bank and credit card statements to try to identify deductions.

Remember to keep in mind that taxes are an obligation of every American. Failing to declare what you earned to the Internal Revenue Service is a form of tax evasion…and the penalties can be quite severe, including jail time and hefty fines. Make sure you are in the headlines for your successes on the court and not for being a victim of the IRS’ global crackdown on people who hide their offshore income.

For more information or to speak with an experienced tax professional, knowledgeable about international taxes for overseas pros, please call Dr. Karaffa at +1 (804) 363-9684, e-mail him at JKaraffa@ProSportCPA.com, or visit www.ProSportCPA.com. Good luck with your pro career!