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World Class Tennis Players Mindful of Tax Implications

Top tennis players usually earn income in several different countries during the year. Minimizing their tax liabilities requires some creative planning, including changing their residence to a tax friendly country.

Andre Agassi once unsuccessfully argued against British tax authorities when they taxed him on a portion of his Nike endorsement income. In 2012, Rafael Nadal refused to play in the Queen's Club tournament in the UK, citing the country's strict tax laws as a deterrent. Athletes in other sports are also affected. Jamaican sprinter Usain Bolt has refused to compete in Britain several times. In order to ensure that athletes would show up for the 2012 Olympics, British tax authorities agreed to a limited exemption.

In 2014, Roger Federer earned winnings in about a dozen countries, including Australia, France, Canada, Switzerland, Monaco, the United Kingdom, the United Arab Emirates, and the United States. As a result, he owes taxes in each of these countries, as well as his home country of Switzerland.

To minimize their tax exposure, top athletes often take up residence in tax-friendly locations like Monaco and Switzerland. In 2002, German tennis legend Boris Becker was convicted for tax evasion after falsely claiming Monaco as his primary residence. Golfer Phil Mickelson said recently that he would consider making "drastic changes" as a result of his growing tax burden, hinting that he may leave California for another state.

For American athletes, the most popular state to reside in is Florida, which has no state income tax. The Williams sisters, originally from Los Angeles, moved to Florida in order to escape California's 13.3% income tax rate. Tiger Woods left California for Florida in 1996 for the same reason.

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