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LeBron James Will Save on Taxes in Miami

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By Michael Cohn
July 9, 2010

Lebron James’s much-hyped decision to join the Miami Heat will undoubtedly yield him a fortune in tax savings, given the lack of a state individual income tax in Florida.

Steve Henley, national tax practice leader at CBIZ MHM, acknowledged that athletes do have to pay state taxes when they play games on the road. But with all of James’s endorsement deals and other business interests, he would still be able to save a bundle by moving his residence from Ohio, where he has been playing with the Cleveland Cavaliers, to sunny Florida. He is expected to earn up to $15 million a year with Miami and could save between $6 million and $8 million on his taxes, according to various estimates, by moving to Miami.

“We have offices in Cleveland and Akron, and I’ve driven past his home,” Henley told me. “Clearly everybody seems to have focused on the fact that Florida does not have a personal income tax. It’s hard for me to believe that was a big part of the analysis he did, but who knows.”

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While he doubts the lack of an income tax was a major factor behind the NBA All-Star’s decision, he does anticipate that James will decide to move his residence to Florida. It would certainly shorten the commute anyway.

“My guess is that we would get more bang for the buck by moving his residency to Florida,” said Henley. “He would be able to benefit from not only his athlete revenue stream, but also from other revenue streams. I’m sure that’s a big number.”

Henley suggests that James change his voter registration and get a Florida driver’s license, just in case the IRS starts wondering why he’s not in Ohio anymore.

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