April 30th marked the first full paycheck players received. Were you surprised by the amount you received? Do you feel like your team is withholding too much in taxes?

When you have too much money withheld from your paychecks, you end up giving the government an interest-free loan (and getting a tax refund). Ask yourself if there are better ways to use that money by investing the proceeds and earning interest on it? On the other hand, having too little withheld from your paycheck could mean an unexpected tax bill or even a penalty for underpayment. Either way, there’s a better way to manage your hard-earned money.

How to make sure your paycheck is the right amount.

The key to paying the right amount of tax is to update your W-4 regularly. The goal is to reduce the potential for both a tax bill and a tax refund to zero, or close to it.

If any of the following describe your situation you will benefit from updating your W4:

Your salary has significantly increased from last year
You made your MLB Debut this year
You have off the field income from endorsements, appearances, or interest & dividends
You had a lifestyle change (marriage, divorce, birth or adoption of a child, new home) in the last 12 months
You completed your Form W-4 in Spring Training without the help of a CPA®

As an example, after reviewing a 2nd year MLB player’s paystub we reduced his withholding which will increase his paycheck be an additional $3,500.

If you would like to start putting more money in your pocket every month, we can help.

Contact us for a FREE review of your tax situation and we will get back to you within 24 hours.

Table 2. Monthly Budget Example

Minor League Salary Structure

Until a minor league player is placed on a 40-man roster, monthly salaries are $1,150 for the short season teams, $1,300 for low A and $1,500 for high A. For players repeating a year at the same level, the salary goes up $50 each year. For AA, the monthly salary is $1,700 and it goes up $100 per month for subsequent years. For AAA, the monthly salary is $2,150 per month and it goes up to $2,400 the second year and $2,700 the third year.

A player must be placed on the team’s 40-man roster or be subject to the Rule 5 Draft at the end of his fourth season (if signed at age 19 or higher) or fifth season (if signed at age 18 or lower).

2016 Salary for first year on 40-man roster: $41,400
If a player becomes a minor league free agent, higher salaries can be negotiated
Meal money is $25 per road day

Conclusion

Signing for a significant amount of money gives you a tremendous head start in life. The players who spend wisely and invest for the future can be set for life. However, it can quickly be squandered and like so many before you are left with regret of what could have been.

Don’t leave your future to chance. Before you sign your contract you should have a plan and team in place who will help you manage, protect and maximize your financial future. If you would like to discuss our Athlete Wealth Plan program we would love to hear from you!

How To Increase Your Next Paycheck