Prize Money Taxes: Golf, Tennis, UFC, Boxing and Track

If you play a team sport, you are an employee. The team takes out taxes, pays half your Social Security and Medicare, and sends you a W-2. If you play golf, tennis, fight in the UFC or box, or run track, you are almost always an independent contractor. Nobody takes taxes out of your prize money, and nobody pays half of anything for you. That one difference changes everything below.

Rule 1: You pay self-employment tax on top of income tax

• 15.3% self-employment tax on about 92% of your profit: 12.4% for Social Security up to $184,500 in 2026, and 2.9% for Medicare with no cap. Above $200,000 (single), add another 0.9% Medicare.
• You can deduct half of it, but you still pay all of it.
• Promoters and tours usually send a 1099, not a W-2. For payments made in 2026 the 1099-NEC threshold is $2,000, but all of your prize money is taxable whether a form shows up or not.

Rule 2: Pay the IRS four times a year

Because nothing is withheld, you send estimated taxes yourself: April 15, June 15, September 15, and January 15. The safe harbor is paying 90% of this year's tax, or 100% of last year's (110% if last year's income was over $150,000). Miss them and you owe penalties on top of the tax. The simple habit: move a fixed share of every check into a tax account the day it lands.

Rule 3: States tax you where you win

• Your home state taxes all of your income, and the state where the tournament or fight happens can tax what you earned there. California, for example, treats a nonresident's winnings from a contest in California as California income.
• A full golf schedule can touch 15 to 20 states in a year. Each one can mean a state return.
• That is why so many touring pros live in Florida, Texas, Tennessee, or Nevada: no state income tax at home, so they only pay where they actually compete. It has to be a real move, not an address on paper.

Rule 4: Other countries take theirs first

• United Kingdom: 20% withheld from prize money for non-resident players (Wimbledon, the Open). It is a payment on account, and the UK can also tax part of your worldwide endorsement income based on days you compete there.
• Canada: 15% withheld from non-residents' prize money under Regulation 105, with waivers available.
• France: 15% withheld at the French Open.
• Australia: withheld at foreign-resident tax rates, which vary.
• Back home: Americans are taxed on worldwide income. Foreign tax you paid becomes a foreign tax credit on your US return, up to the US tax on that income. Moving to Monaco does not help a US citizen.

Rule 5: Your costs are deductible, so track every one

This is the one advantage contractors have. Team athletes can no longer deduct agent fees or job costs on a federal return. You can, on Schedule C, because it is your business.

• Golf caddies: a common deal is 10% of a win, 7% of a top 10, 5% of a made cut, plus a weekly salary of about $1,500 to $3,000.
• Tennis: players pay their own coaches, flights, hotels, and food. Top coaches often take 10% to 15% of earnings, and top-50 players commonly spend $150,000 to $500,000 a year.
• Boxing: a manager's cut is capped at one-third of a boxer's purse in California and Nevada. Trainers commonly take about 10% to 20%, cutmen a flat fee or a few percent.
• Also deductible: agent fees, physios, travel, equipment, entry fees, and a CPA. Free gear from a sponsor is taxable income, though.

Rule 6: The 20% business deduction mostly skips athletes

Many business owners get a 20% qualified business income (QBI) deduction. The tax rules list athletics, including golf, tennis, boxing, martial arts, bowling, track and field, and racing, as a specified service business. For 2026 that deduction starts phasing out above $201,750 of taxable income (single) or $403,500 (married filing jointly) and is gone about $75,000 later ($150,000 for joint filers). A player with a big year gets little or none of it.

Rule 7: Build your own retirement plan

• Solo 401(k): in 2026 you can put in up to $24,500 yourself, plus business contributions, up to $72,000 total (more with age catch-ups).
• SEP IRA: about 20% of your net self-employment earnings, simpler to set up.
• Tour plans help but are not enough: the ATP pension covers up to 300 players and takes 3 years of service to qualify; the PGA Tour credits players for cuts made. Do not count on them alone.