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Reply to "2018 draft stat"

TPM posted:
roothog66 posted:
TPM posted:

FYI, Uncle Sam takes 25% off the top, not for the very small bonuses paid out. Most of the larger bonuses are paid out in 2 payments, one after the draft and another in March. So a million payout is 500k, less 12.5% regardless of what tax bracket you will fall in. Then there is the agents fee, a good guy will split his fee in two payments. And then there are your state taxes.  

The MLB scholarship fund isn't what most think it is. Whatever you have negotiated, gets reduced each time you move up a level for no less than 90 days.  And then, believe it or not, you pay taxes on that scholarship money, which earns no interest.

I have been to this rodeo, so lets say a milllion after taxes, etc. becomes 700k which is a nice chunk of change. But I wouldnt let my son who is headed off to a college world series contender spend his time in the lower levels of milb. Ever.

JMO

And note that the 25% "off the top" is not enough to cover the tax bill for those who don't do much to protect that money then they get hit with a big surprise the next April. Paid out in 2 payments at least makes it all taxable at a lower %. 

Yes, who knows exactly what they will end up paying in taxes. I almost threw up when I saw what sons first check really was. We live in Florida so no state taxes. 

Then a lot of the kids go out and spend a lot on boy toys. They don't know how to save and their parents don't educate them on being responsible.

BTW, they don't split the payments to help the player out. Teams claim to be cash poor when first checks are drawn. You dont get drafted and paid right away. Ask if I feel badly for them. 

I don't.

 

 

Like to add a couple of things to TPM. Financial adviser mentioned that those athletes who go to college 3 - 4 years are USUALLY more responsible when dealing with finances and planning.  There is a tendency that those who will buy a fancy expensive toy are the high schoolers.

Also, it can be put in the contract if the bonus will be split up.  Not saying the MLB club will accept it but it can.  Son's team did split up the signing bonus over 2 calendar years.  Still got nailed by taxes/

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