As you watched the on-field celebrations taking place after the Super Bowl, you may have missed Internal Revenue Service agents high-fiving and chest-bumping each other and exclaiming, “We’re going to Disney World!”
Alas, their euphoria was (somewhat) for naught.
The New England Patriots beat the Seattle Seahawks. Patriots’ quarterback Tom Brady received the MVP award – and a potential tax bill from the IRS totaling more than $60,000.
Each Patriots player received $97,000 for winning the Super Bowl. Seahawks players had to be content with a mere $49,000, according to CNBC. As MVP, Brady was awarded a 2015 Chevrolet Colorado pickup truck. But either out of the kindness of his heart or the possibility that his supermodel wife Gisele Bundchen isn’t a fan of being squired around in a pickup, Brady said he was giving the truck to teammate Malcom Butler, he of the goal-line interception that assured the Patriots’ win.
Without expensive options, a Chevy Colorado is $34,000.
At Brady’s 39.6% income tax bracket, the taxes on the truck are more than $13,000 regardless of whether he gives it to Butler, drives it himself, or uses as doorstop in the mega-mansion he and Gisele are building in Boston.
But wait, there’s more, according to Forbes:
“Assuming Brady has made at least $5.25 million of taxable gifts up to this point in his life (a safe bet); he will owe a 40 percent gift tax on this $20,000 taxable gift. That’s an $8000 gift tax on top of a $13,500 income tax on the truck, for a combined federal tax hit of $21,500.”
Over in the corner of the end zone the IRS agents were still at work with their calculators, working on Brady’s Super bowl taxes. Why? His winner’s share check of $97,000. Total taxes on that money are around $40,000.
Thus, Brady’s total tax bill for winning the Super Bowl and its MVP trophy would have come in right around $60,000.
It’s not like Brady couldn’t afford it. According to Spotrac.com, Brady is under a three-year contract paying him $27 million to play football. His and Gisele’s combined net worth is reported in the $100 million area – or more.
Nevertheless, there’s inevitably a raised eyebrow – or astonishment – when the IRS comes looking for its cut of an athlete’s award (as in Brady’s truck) for superlative performance.
After the Olympic Games there are stories that surface about athletes being taxed on the medals they’ve spend a lifetime training to win – as members of the U.S. Olympic team.
Should such earnings be taxed? It’s a national debate that continues with each such event.
Fortunately for the Patriots’ Malcolm Butler, he won’t owe the taxes on the truck. As recipient of a gift, he’s free and clear. And, as it turns out, Brady won’t be paying the taxes on the truck after all. He’s decided not to accept the truck, and Chevy is giving it straight to Butler.
Tom Brady won the MVP award, but he wasn’t getting a pass from the IRS.
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