Every now and then, ESPN, Fox Sports, or a major media outlet will provide statistics on the general state of personal finance for professional athletes years after their playing days are over. According to a 2009 piece in Sports Illustrated, over 60% of former NBA players are in “severe financial distress” within five years, and that figure approaches 80% for NFL players shortly after retirement.
That kind of wasted potential makes me sad. I just wish that some of these guys had the right mentor, financial advisor, or whatever term you want to use, to give them guidance during their playing days so that they could create a sustainable lifestyle going forward. It makes me sad because it is so easy to live off the income when you are dealing with that kind of money—it makes me sick to think about how easy it would be to structure a … Read the rest of this article!
IRS wage garnishments are the most punitive form of garnishments that exist of any kind, anywhere. I was reviewing tax law and came across some information garnishment information from the IRS, and could not believe how little an individual gets to keep in the event they owe taxes to the federal government.
When a garnishment is properly filed and sent to an individual’s employer, an enormous chunk of each paycheck goes to the IRS (Publication 1494 provides an overview of the exemptions for each specific situation).
Let’s look at an illustration to underscore the point. Imagine you owe $10,000 to the IRS and earn $4,000 per month post-tax, paid biweekly, at the time that a garnishment is sent to your employer.
The IRS lets you keep a base of only $461.54 each time that you receive a paycheck. If you receive two paychecks that month, you are only getting $923.08 … Read the rest of this article!