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PGA Winner will pay nearly 50% in taxes
Pittsford, N.Y. --- After winning the British Open last month a Forbes.com report showed that golfer Phil Mickelson would pay a tax rate of about 61% on his winnings. The report showed that the $2.2 million winnings would be reduced to about $840,000 after takes from the U.K., the U.S., and Mickelsons home state of California were assessed.
So how much can the winner of the PGA Championship at Oak Hill Country Club expect to pay in taxes? For that answer we went to Bruce Zicari a CPA and Partner at The Bonadio Group.
The prize purse and winners share are not official announced until Wednesday so for the purposes of this exercise we use an approximate total based on the 2012 PGA Championship winners prize; $1.5 million.
"No matter who you are, you show up in New York State to compete in this tournament New York State is going to take their share of the pie and that's the top New York State tax rate is 8.8% Zicari explained. So right off the bat 8.8% goes to New York State.
That works out to approximately $132,000 on its way to Albany.
After various deductions that most golfers can expect, the federal tax rate is expected to be about 36% according to Zicari. That means the PGA Champion will send about $540,000 to Washington D.C.
As well as they get a small self-employment tax on top of that of between three and four percent, Zicari adds while explaining that about 3.8% is the expected tax for self-employment in 2013.
That works out to be another $57,000 in taxes paid by the Oak Hill winner.
Then it depends on what state each golfer lives in. Tiger Woods lives in Florida where there is no state income tax collected. If he were to win the PGA Championship Zicari expects Woods would pay an approximately 49% tax rate; meaning he would keep a little more than $770,000 of that grand prize but have to pay about $730,000 in taxes.
A golfer from another state, such as Phil Mickelson from California, would pay a tax rate closer to 53% Zicari added. He explained that while Californias state tax rate is about 13%, golfers are allowed to deduct the New York State portion they already paid (8.8%) and simply pay California the difference.
"We've done tax returns for Buffalo Bill football players and they have to pay taxes to every state that they play in as well as to their home state, Zicari explained. So all these entertainers and athletes, anywhere they go and perform they have to pay the proper amount of tax to that particular state as well as they have to report it to their home state so it gets well, quite taxing.