Monday’s post about Cliff Lee’s taxes created quite an interesting discussion in the comments section. Off of the site, I had a good conversation with Robert Raiola, a CPA at Van Duyne, Behrens & Co., P.A. Raiola helps many athletes with their taxes and provided great insight to Darren Rovell of CNBC in his piece on Cliff Lee and taxes from November 4, 2010. Here are some figures that Lee might have considered when weighing the options of going to play for the Yankees, Rangers, or Phillies:
*State taxes based on top individual income tax rate in Pennsylvania (3.07%), New York (8.97%), and Texas (0.00% – tax listed based on “jock tax”).
I also spoke to Chris Dingman of The Dingman Group to find out where Lee might be looking to move now that he is a member of the Phillies. Dingman’s Philadelphia clients (MLBers & NHLers) have typically been attracted to Haddonfield, New Jersey. Players also like Rose Tree/Media area in Delaware County, PA. Both places have great schools with easy access to the stadium. Single players generally like to live in South Philly near the stadium.
Raiola says the tax play is for Lee to get a place outside the city limits of Philadelphia, since Philly has its own separate city tax rate of 3.9285% for residents (3.4985% for non-residents – Lee would only have to pay this tax on half his income – half his games are played in Philly). New Jersey has a top individual income tax rate of 8.97%, which is a gross income tax rate (no write-offs). Lee could live there, but still attempt to remain domiciled in Arkansas as a resident, which has a slightly lower tax rate.
This is why you make guys like Raiola and Dingman a part of your team; your clients will come to you to ask about tax and relocation questions. It is better to become familiar with the experts in those areas so that you are well prepared to give your clients options immediately.