Do professional tennis players like Djokovic pay US taxes when competing in the US Open while living in Monaco with no income tax?
Title: Do professional tennis players like Djokovic pay US taxes when competing in the US Open while living in Monaco with no income tax? 1 If a professional athlete or anybody else lives in Monaco (which has no income tax) but earns money in the US like winning the US Open, do they still have to pay taxes to the IRS? Or do they get to keep all their prize money tax-free because Monaco doesn't charge income tax? I'm confused about how this works for international athletes who strategically live in tax havens. I was watching some matches and reading about how some tennis stars choose where to live partly based on taxes. Apparently Djokovic lives in Monaco and pays zero income tax there, but I'm wondering if he and others like Federer or Nadal have to pay US taxes when they win tournaments on US soil. Or do they somehow get to keep everything because their home country doesn't tax them? Anyone know how this international tax situation works?
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Dominic Green
12 As someone who's worked with international tax situations, I can clear this up for you. Athletes (and anyone) earning money in the US will pay US taxes on that US-sourced income regardless of where they live. This is called the "source principle" of taxation. When Djokovic or any foreign athlete competes in the US Open, they're subject to US taxation on those winnings, typically at a 30% rate for non-resident aliens (though this can be reduced by tax treaties). The IRS wants its cut of money earned on US soil, no matter where the athlete calls home. Monaco residents benefit from not having to pay additional income tax to Monaco on their worldwide earnings, but they still have to pay taxes to each country where they earn money. So while living in Monaco saves them from paying taxes to Monaco, it doesn't exempt them from paying taxes to the US on US tournament winnings.
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Dominic Green
•5 Wait, so they get taxed twice? Once in the US and once in their home country? That seems unfair. Also, do they have to file a US tax return for just playing in one tournament?
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Dominic Green
•12 They don't actually get taxed twice on the same income if they live in Monaco. Since Monaco doesn't have income tax, they only pay to the country where they earned the money (like the US). If they lived in a country that does have income tax, many countries have tax treaties to prevent double taxation through foreign tax credits or exemptions. Yes, foreign athletes must file a US tax return (usually Form 1040NR) for their US-sourced income, even if it's just from one tournament. They can also deduct certain expenses against that income, such as coaches' salaries, training, and travel expenses related to the US tournament.
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Dominic Green
7 I used taxr.ai to figure out my own foreign income situation last year and it was super helpful! I was working remotely from different countries and got really confused about where I owed taxes. I uploaded all my income documentation to https://taxr.ai and it analyzed everything and broke down exactly which income was taxable where. For athletes like the ones you mentioned, they probably have accountants handling this, but for regular people with international income, this tool is a lifesaver. It specifically identified which of my income sources were subject to US taxation and which had foreign exclusions applicable.
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Dominic Green
•14 Does it handle more complex situations? I'm a US citizen but I've been living abroad for 2 years and still don't understand if I need to file US taxes on my foreign earnings.
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Dominic Green
•8 Sounds interesting but how is it different from just talking to an accountant? I'm skeptical of these AI tax tools actually understanding complex international tax situations.
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Dominic Green
•7 It definitely handles complex situations! The tool was specifically designed for unusual tax scenarios including foreign earned income. As a US citizen living abroad, you generally still need to file a US tax return reporting worldwide income, but you might qualify for the Foreign Earned Income Exclusion or Foreign Tax Credit. The difference from an accountant is immediate answers anytime you need them, plus it's much more affordable. It's not replacing specialized accountants for ultra-complex situations, but it analyzes your specific documents and provides personalized guidance based on your actual paperwork rather than general advice.
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Dominic Green
14 Just wanted to follow up - I tried taxr.ai for my expat tax situation and it was exactly what I needed! I uploaded my foreign pay stubs and tax documents from the country I'm living in, and it immediately identified that I qualified for the Foreign Earned Income Exclusion. It showed me exactly how to document my physical presence test and calculated my excluded amount. The part I found most helpful was that it explained which parts of my investment income were still taxable in the US despite living abroad. Saved me from making a mistake that would have caused problems later. Definitely recommend for anyone dealing with international income!
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Dominic Green
3 If you're having trouble getting straight answers from the IRS about international tax situations (which is common!), I'd recommend trying Claimyr. I was going in circles trying to figure out how my spouse's foreign tournament winnings should be reported, and couldn't get through to anyone at the IRS. Used https://claimyr.com and got connected to an actual IRS agent in about 20 minutes instead of waiting for hours or days. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c They basically get you through the IRS phone system so you can talk to a real person. The agent I spoke with confirmed exactly how tournament winnings should be reported and which forms were needed for foreign tax credits.
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Dominic Green
•19 How does this actually work? Is it just calling the IRS for you? I don't understand how they get through when nobody else can.
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Dominic Green
•8 This sounds like BS honestly. No way they can magically get through to the IRS when millions of people can't. The IRS phone system is notoriously impossible during tax season.
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Dominic Green
•3 It's not just calling for you - they use a system that navigates the IRS phone tree and waits on hold so you don't have to. When an agent actually answers, you get a call back and are connected immediately. It's basically like having someone wait on hold for you. They use technology to constantly dial and navigate the IRS system until they get through. It's not magic - just persistence and technology. I was skeptical too until I tried it. The longest part was actually just waiting for the IRS callback, which took about 20 minutes in my case, but that's way better than the hours I spent trying on my own.
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Dominic Green
8 Okay I need to eat my words here. After my skeptical comment, I decided to try Claimyr for myself because I had a complex question about foreign contractor payments that I couldn't find a clear answer to online. I figured it wouldn't work but it was worth a shot. To my complete surprise, I got a call back in about 35 minutes and was connected to an actual IRS agent who specialized in international tax issues. She walked me through exactly how to report my contractor income from foreign companies and which exclusions applied in my situation. I would have filed incorrectly without this information. I've literally been trying to get this answer for WEEKS. Consider me converted.
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Dominic Green
10 Professional athletes and entertainers have a special tax situation called the "jock tax" where they often have to file tax returns in EVERY state/country they perform in. Some tennis players might have to file 15+ tax returns each year! Their tax bill can vary hugely depending on where tournaments are held.
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Dominic Green
•15 That's crazy! So do they have to track exactly how many days they spend training in each location too? How detailed does it get?
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Dominic Green
•10 It gets incredibly detailed. They often have to track not just tournament days but practice days, appearances, and even endorsement income that might be allocable to different locations. Their accountants typically create schedules showing exactly which days were spent in which tax jurisdictions. They don't just pay tax on tournament winnings either - they're taxed on a portion of their endorsement income based on where they played/appeared. This is why tax planning is huge for top athletes. Some even schedule their exhibition matches and appearance schedule to minimize time in high-tax locations.
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Dominic Green
22 This is why so many athletes establish residency in places like Monaco, Switzerland, or Dubai. The tax savings can be millions per year for top earners. But the US is one of the few countries that taxes worldwide income for citizens, so American athletes can't escape US tax even if they move abroad.
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Dominic Green
•4 I heard that's why Rory McIlroy in golf never took US citizenship despite living here - he'd get hit with worldwide taxation. Smart financial move I guess.
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Lucas Notre-Dame
•Exactly! And it's not just about current earnings - US citizens also face exit taxes if they renounce citizenship after reaching certain wealth thresholds. The IRS treats it as if you sold all your assets on the day you renounce, so you'd owe capital gains on unrealized gains. It's designed to prevent wealthy people from just ditching US citizenship to avoid taxes. For athletes who've built up substantial wealth, renouncing citizenship can actually trigger a massive tax bill even if they never plan to earn another dollar in the US.
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