The United States has been cashing big from Kenyan athletes who win races held on its soil.
A report by the Nation revealed that Kenyan athletes who compete in races in the US pay the Internal Revenue Service (IRS) 30 per cent taxation.
This is because the US considers athletes who receive prize money from races as contractors and they withhold part of their money which is taken away before they are handed the remaining cash from the prize money.
The publication quoted Kenyan lawyer Ben Akech who explained that many athletes have unclaimed tax refunds after racing in America.
“Each year, hundreds of professional Kenyan runners and athletes participate in races in the United States. The Internal Revenue Service (IRS) considers athletes who receive prize money from races as contractors and subject them to a 30 per cent taxation withholding on the income earned,” he stated.
The lawyer noted that most athletes have a poor understanding of the law and they lack proper financial advisers who can give them sound legal advice, hence they end up losing money amounting to millions.
Akech stated that it is possible to reduce the amount paid and get a tax refund from the IRS on behalf of the athlete who won the race.
At the moment, Akech is representing two Kenyan athletes who won in past races and the IRS got hold of their millions which they could have claimed if they had proper legal representation.
“As an attorney licensed in Kenya and the United States, I am currently engaging IRS on behalf of Daniel Limo and Olga Kimaiyo (past winners of the Los Angeles Marathon),” he stated.
The tax issues arising from the income accruing to foreign athletes and entertainers are complex but the IRS maintains that everyone earning an income from the US has to pay taxes.
"If you are a foreign athlete and/or entertainer performing independent personal services in the United States, you must generally pay income tax on your US source income.
"This includes compensation for performances, endorsements, the sale of merchandise, and royalty, or other, income closely related to the event. Consequently, you are required to file a federal income tax return to report and pay any US tax," a statement on the IRS website reads.
