Started By
Message
re: TJ Moe speaks obvious truth about CFB unionizing
Posted on 3/29/14 at 2:07 pm to Gravitiger
Posted on 3/29/14 at 2:07 pm to Gravitiger
It would probably eliminate the scholarship's exemption. The IRS would reclassify the scholarship. More than likely creating several categories including one specifically for athletic scholarships. Which would be excluded from the exemption making the whole portion taxable income. Which would also have the IRS take a look at all expenses paid while on the road as well for away games.
The exemption currently is given because they are classified as students, but if they are classified as employees they would no longer have that exemption. And the whole amount currently is not exempt. Room and board portion of the scholarship is taxable. But since they are limited in what work they are allowed under the NCAA their AGI will probably never be high enough to generate taxable pay.
The concern will be raised is if they are treated as employees and their scholarship becomes a payment for services rendered to the university. For example I decide to go and get my PhD from UNC. If accepted my tuition is free to complete my degree. I also will receive a scholarship close to 30k a year. Part of the agreement will require me to do research and/or teach. The IRS will require a breakdown for that part and determine based on hours doing research or teaching how much of that scholarship is taxable.
The reclassification of a student to employee will be huge in regards to how they treated and seen by the IRS. For recruiting the IRS will love the private schools who costs 60k a year or the big schools like in the SEC who recruit so many out of state, since a higher tuition rate.
And all that does not even include IRS classification of fringe benefits or per diem that can be taxable for lodging, travel, and meals while on the road for away games. Not excluding all gifts they receive from participating in bowl games. And lets not forget school state income tax as well and advantages that would apply to schools in states like FL or Texas where they have no state income tax.
This whole ordeal will be a nightmare if upheld and pushes across the country.
The exemption currently is given because they are classified as students, but if they are classified as employees they would no longer have that exemption. And the whole amount currently is not exempt. Room and board portion of the scholarship is taxable. But since they are limited in what work they are allowed under the NCAA their AGI will probably never be high enough to generate taxable pay.
The concern will be raised is if they are treated as employees and their scholarship becomes a payment for services rendered to the university. For example I decide to go and get my PhD from UNC. If accepted my tuition is free to complete my degree. I also will receive a scholarship close to 30k a year. Part of the agreement will require me to do research and/or teach. The IRS will require a breakdown for that part and determine based on hours doing research or teaching how much of that scholarship is taxable.
The reclassification of a student to employee will be huge in regards to how they treated and seen by the IRS. For recruiting the IRS will love the private schools who costs 60k a year or the big schools like in the SEC who recruit so many out of state, since a higher tuition rate.
And all that does not even include IRS classification of fringe benefits or per diem that can be taxable for lodging, travel, and meals while on the road for away games. Not excluding all gifts they receive from participating in bowl games. And lets not forget school state income tax as well and advantages that would apply to schools in states like FL or Texas where they have no state income tax.
This whole ordeal will be a nightmare if upheld and pushes across the country.
1
Posted on 3/29/14 at 2:38 pm to TideWarrior
quote:That is my point. Unless there is a revision of the tax code, they still aren't paying any income tax on their scholarships. The policy behind the exemption may be to help students, but even if they are also "employees" they are also students--they attend classes and earn credits toward graduation. Nowhere in the code or in any revenue ruling does it say "this exemption only applies if they are students only and not also students and employees." Employers pay for their workers to finish school all the time, and it isn't necessarily taxable. Even if they eliminate the exemption, qualified tuition payments are deductible (plus books, fees, etc), and it is arguably a business expense that also qualifies for deduction. Then there is the Lifetime Learning Credit and several other provisions that they may use. I don't think it is any type of foregone conclusion that Congress will rewrite the tax code over this, especially in the current political climate. Would also be shocked if these kids (and their parents) didn't get some solid advice on the tax implications before they filed with the NLRB.
It would probably eliminate the scholarship's exemption. The IRS would reclassify the scholarship. More than likely creating several categories including one specifically for athletic scholarships. Which would be excluded from the exemption making the whole portion taxable income. Which would also have the IRS take a look at all expenses paid while on the road as well for away games.
The exemption currently is given because they are classified as students, but if they are classified as employees they would no longer have that exemption. And the whole amount currently is not exempt. Room and board portion of the scholarship is taxable. But since they are limited in what work they are allowed under the NCAA their AGI will probably never be high enough to generate taxable pay.
The concern will be raised is if they are treated as employees and their scholarship becomes a payment for services rendered to the university. For example I decide to go and get my PhD from UNC. If accepted my tuition is free to complete my degree. I also will receive a scholarship close to 30k a year. Part of the agreement will require me to do research and/or teach. The IRS will require a breakdown for that part and determine based on hours doing research or teaching how much of that scholarship is taxable.
The reclassification of a student to employee will be huge in regards to how they treated and seen by the IRS. For recruiting the IRS will love the private schools who costs 60k a year or the big schools like in the SEC who recruit so many out of state, since a higher tuition rate.
And all that does not even include IRS classification of fringe benefits or per diem that can be taxable for lodging, travel, and meals while on the road for away games. Not excluding all gifts they receive from participating in bowl games. And lets not forget school state income tax as well and advantages that would apply to schools in states like FL or Texas where they have no state income tax.
This whole ordeal will be a nightmare if upheld and pushes across the country.
This post was edited on 3/29/14 at 2:47 pm
Page 1 of 1
Popular
Back to top
Follow SECRant for SEC Football News