Guide · money

US taxes on an overseas basketball salary

A US citizen or resident alien who is paid to play basketball in another country still has a US filing life. This page is the federal rules we can cite: worldwide income, the foreign earned income exclusion, the foreign housing exclusion, the foreign tax credit, and why a state can still tax the same salary. It is for players and families reading an offer. It is not a tax return, and it is not a calculation of what you owe.

Who still files in the United States

If you are a US citizen or resident living or traveling outside the United States, the IRS says you generally file income-tax returns and pay estimated tax the same way as people living in the United States. Whether you must file usually depends on your gross income from worldwide sources. Income you later exclude under the foreign earned income exclusion, or as a foreign housing amount, still counts as gross income for that filing test. Living in the country where the club plays does not, by itself, end the US return. Filing requirements for citizens and residents abroad · Publication 54

This page is for those US persons. A player who is a nonresident alien for US tax purposes is under a different set of rules, generally aimed at US-source income. We do not restate that system. A green card holder is a resident alien and is in the worldwide-income group.

The playing salary is the income people mean. The IRS exclusion, when it applies, is for foreign earned income: pay for personal services performed in a foreign country. Wages and salaries are the examples Publication 54 uses. Interest, dividends and capital gains are not earned income, so an exclusion that fits a salary does not automatically fit other money. Pay for services performed in the United States, including a training block or games at home, is not foreign earned income for the days the services were performed in the United States. Publication 54, earned income · Foreign earned income exclusion

Two things that are not US income tax sit next to the offer. The agent's commission is capped, under FIBA's regulations, and explained in agent fees. What you spend before anyone pays you is in what it costs to play overseas. Neither is a line on Form 1040 by itself.

The foreign earned income exclusion

The exclusion lets a qualifying person leave a limited amount of foreign earned income out of US taxable income. You claim it by filing Form 2555 with the return. The IRS's own warning is the one to remember: the exclusion applies only if you meet the tests and you file a return that reports the income. Omitting the salary is not the exclusion. Figuring the exclusion · About Form 2555

For tax year 2026, the maximum exclusion is $132,900 per qualifying person. For tax year 2025, it was $130,000 per qualifying person. If both spouses work abroad and each meets a residence test, each can choose the exclusion. The IRS says that together they could exclude as much as $260,000 for 2025. You cannot exclude more than your foreign earned income for the year, and if you also claim the foreign housing exclusion the earned-income exclusion is limited to foreign earned income minus that housing exclusion. Figure the housing piece first. IRS: limit on the excludable amount · Notice 2026-25 (PDF)

The maximum is prorated when you qualify for only part of the year. The IRS method is: multiply that year's maximum by your qualifying days in the year, then divide by 365, or by 366 in a leap year. Qualifying days are the days in the year when your tax home is in a foreign country and you meet either the bona fide residence test or the physical presence test. We are not running that formula on a sample contract. The season length is why the proration matters, and it is below.

The two tests, and the tax home under both

You need a tax home in a foreign country, and you need one of the two tests.

• Physical presence. 330 full days in a foreign country or countries during any period of 12 consecutive months. The days do not have to be consecutive. The 12-month period can start on any day, and you can choose the period that gives the largest exclusion. The test does not care why you are abroad. It does care that you were there. A full day is 24 hours from midnight to midnight. Time on or over international waters does not count, so the day you fly is often not a full day. You can change countries without losing days if the trip stays inside foreign countries or takes under 24 hours. You do not meet the test if you miss the 330 days for any reason, including illness, a family problem, a vacation, or the club sending you home. A waiver exists only where the IRS has listed a country for war, civil unrest, or similar conditions. Physical presence test
• Bona fide residence. You are a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year. For a calendar-year filer that is 1 January through 31 December. Brief trips back to the United States can fit, if you intend to return to the foreign residence without unreasonable delay. Living abroad for one year does not, by itself, make you a bona fide resident. The IRS says that someone who goes abroad to work for a specified period ordinarily will not be treated as a bona fide resident, even if the job lasts a full tax year or longer. The test is available to US citizens, and to resident aliens who are citizens or nationals of a country that has an income-tax treaty with the United States. A statement to the foreign tax authorities that you are not a resident, if they accept it, blocks the test. Bona fide residence test
• Tax home. Your tax home is the general area of your main place of business, employment, or post of duty, not automatically where your family lives. You do not have a foreign tax home for any period when your abode is in the United States (the armed-forces combat-zone exception is the one the IRS carves out). Abode looks at family, economic, and personal ties. Keeping a house in the United States does not, by itself, put your abode there, and moving your household abroad is the IRS's own illustration of a foreign abode. An assignment you expect to last, and that does last, for one year or less is temporary unless the facts say otherwise. If you expect it to last more than one year, it is indefinite. Being temporarily away from a US tax home does not qualify you for the exclusion. Tax home in a foreign country

A basketball season collides with those rules in a specific way. Most European seasons run roughly September or October to May or June. That window is on the play-overseas guide. It is one stretch of work that crosses 1 January, so it is two US tax years. The 330 days can sit inside a 12-month period that is not a calendar year. The exclusion cap for each year is still prorated by the qualifying days that fall inside that year. Arriving in October does not give you 330 days before 31 December.

The same season is also often expected to last one year or less. Under the tax-home page, that expectation can make the assignment temporary, and a temporary assignment does not move your tax home out of the United States. A second season, or a deal that was always going to run past a year, is a different set of facts. The IRS decides the tax home from those facts. We do not.

Puerto Rico, Guam, the US Virgin Islands, the Northern Mariana Islands and American Samoa are not a "foreign country" for this exclusion. International waters are not one either. A contract in a US territory is not this page's exclusion. What counts as a foreign country

Housing the club provides

On top of the earned-income exclusion, a qualifying person can have a foreign housing exclusion or a foreign housing deduction. The exclusion is for housing paid with employer-provided amounts. The deduction is for housing paid with self-employment earnings. Publication 54 is the list of which expenses count. Reasonable rent and most utilities can. Buying a place, and the mortgage on it, does not. Publication 54, housing

The housing amount is housing expenses minus a base amount, and the expenses themselves are capped. Notice 2026-25 sets both pieces for 2026 off the $132,900 exclusion. The base for a full year in the qualifying period is $21,264 (16 percent of $132,900). The general cap on housing expenses for that same full year is $39,870 (30 percent). The IRS says the general limitation for 2025 was $39,000. Under the 2026 general cap, a full year of expenses at the $39,870 ceiling, minus the $21,264 base, is a housing cost amount of $18,606. That arithmetic is the published general limit. It is not your exclusion. A partial year prorates both the base and the cap. Some cities have a higher expense cap in the same notice. Notice 2026-25 (PDF) · IRS housing limitation

A club apartment is not automatically tax-free, and it is not automatically outside the salary. Employer-provided housing can be part of what the housing exclusion is built to address, subject to that base and that cap. The contract question, whether an apartment is even in the deal, is the contract checklist. Our index tags housing as "usually" included on many leagues. That tag is an editorial estimate, not a tax figure. Reported cash ranges, which are also not take-home pay, are on first-year salaries and salaries.

The foreign tax credit

The foreign tax credit is the other main tool. It is meant to relieve double tax when the same income is taxed by the United States and by a foreign country. You generally claim it on Form 1116. You can instead deduct qualified foreign taxes on Schedule A. It is one choice or the other for those taxes, not both. The credit can reduce US tax on foreign-source income. It cannot reduce US tax on US-source income. Foreign tax credit · Credit or deduction · About Form 1116 · Publication 514

You cannot take the credit, or a deduction, for foreign tax on income you exclude under the foreign earned income exclusion or the foreign housing exclusion. If the wages are entirely excluded, none of the foreign tax on those wages is creditable. If only part of the wages is excluded, you cannot credit the fraction of the foreign tax that belongs to the excluded part. Publication 514 writes that fraction out. If you do claim a credit or deduction for tax on income you could have excluded, the exclusion can be revoked, and a revocation matters in later years because the choice, once made, stays in effect until you revoke it. You can still use the credit on foreign earned income above the amount you excluded. Choosing the exclusion · Publication 514, taxes on excluded income

Two other consequences are on the same IRS page. If you exclude foreign earned income, you cannot take the additional child tax credit, and you do not qualify for the earned income credit for that year. Choosing the exclusion

Which tool is worth more depends on how much foreign tax you actually paid or accrued, and on the rest of the return. A country that taxes the salary heavily can make the credit more useful than excluding the income and giving the credit up. A country that taxes it lightly can make the exclusion more useful. We do not know the foreign tax on your deal, and we do not rank leagues by tax. A treaty can change which country is allowed to tax an item. The IRS list of income-tax treaties is the index. Read the treaty for the country in the contract. Do not assume the employment article is the one that covers a player until you have read that treaty. A treaty does not replace the US return. US income tax treaties A to Z

Net contracts, and tax the club pays

"Net" on this site means the amount you expect to receive. "Gross" means the amount before tax and before anything else the contract lets the club withhold. Many published top-league ranges are net, which is why the salary table says not to compare them with US gross pay. The contract has to say which one you were offered, in which currency, on which day, for how many months. That checklist is the contract guide. Women's ranges are on women's salaries.

A net offer is not a receipt from the IRS. If the club pays the foreign income tax, Publication 514 still asks whether that tax was your legal liability and whether you paid or accrued it. Tax on income you exclude cannot be credited even when it was yours. We do not have the foreign statute or your contract, so we do not say that a "tax paid by the club" line is, or is not, a foreign tax credit. Ask the club for the written treatment, and ask a preparer to apply Publication 514 to it.

The exclusion is an income-tax rule. It does not remove self-employment tax. Publication 54 says you count self-employment income in full when you figure net earnings from self-employment, including income that is exempt from income tax because of the exclusion, and that self-employment tax applies if those net earnings are at least $400. A player on a club's payroll is not automatically self-employed. The publication's example is a person in business for themselves. If you are self-employed, a totalization agreement can put social security coverage in one country instead of both. The Social Security Administration publishes which agreements exist. Publication 54, self-employment tax · Totalization agreements

State residency is a separate tax

The foreign earned income exclusion is federal. Your state, if it taxes income, uses its own definition of resident and domicile. Moving for a season does not, by itself, end a state residence. This page uses California as the worked example because the Franchise Tax Board publishes both the worldwide-income rule and a day-count safe harbor. It is one state, not a national rule.

• Residents are taxed on all income, from any source. The FTB says you are a resident if you are in California for other than a temporary or transitory purpose, or if you are domiciled in California and outside the state for a temporary or transitory purpose. Residents are taxed on all income regardless of source, including wages. FTB: residency
• The published safe harbor is 546 consecutive days. Someone domiciled in California who is outside California under an employment-related contract for an uninterrupted period of at least 546 consecutive days is treated as a nonresident, unless either of two things is true: intangible income over $200,000 in any taxable year the contract is in effect, or the principal purpose of the absence is avoiding California personal income tax. A spouse or registered domestic partner who goes along for those 546 days is covered too. Return visits that do not total more than 45 days during a taxable year covered by the contract are temporary. Anyone outside the safe harbor is judged on all the facts. FTB Publication 1031 (2025, PDF)
• A single season does not reach 546 days. The FTB's own example is a one-year overseas contract, three months back in California, then another year with the same employer. That person cannot use the safe harbor, because the absence was not an uninterrupted 546 days, and the two contracts cannot be added together. A European-style season, roughly September or October through May or June, is shorter than 546 days. Two back-to-back seasons are not automatically one uninterrupted absence. The publication is the test. We are not applying it to a particular player.

Other states write different tests. Some do not impose a personal income tax at all, so they have no wage tax to add. This page does not catalogue them. The department of revenue for the state where you were last domiciled is the source, and that page is the one that lists which ties still count. How California lists the facts

Filing the return, and the foreign account forms

For a calendar year, the return is generally due on 15 April of the next year. If on that date you live outside the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico, the IRS allows an automatic two-month extension, to 15 June for calendar-year filers. You attach a statement explaining which condition you meet. Publication 54 says that even with an extension you owe interest on tax not paid by the regular due date. A further extension uses Form 4868 and is an extension of time to file, not of time to pay. Where and when to file and pay · Publication 54, extensions

If you expect to meet the bona fide residence test or the physical presence test only after the return is due, Form 2350 is the extension built for that. Publication 54 says you file it by the due date of the return, including the 15 June date when that is your due date because both your tax home and your abode are outside the United States and Puerto Rico. If the trip home happens and you never meet the test, you file as soon as you can. About Form 2350

Publication 54's withholding chapter is about US income-tax withholding. A club outside the United States is not that chapter. If you will owe US tax, estimated tax is the mechanism the same publication points to. The thresholds and the penalty are in the Form 1040-ES instructions. We are not quoting a percentage here. Publication 54

Two reporting forms are easy to mix up, and neither is the income-tax exclusion.

Sources: IRS: FBAR · IRS: who files Form 8938. "Living abroad" for Form 8938 has its own presence test. A club account you can sign, and a personal account in the country where you are paid, both belong in the question. We do not know your balances.

What to do with an offer in front of you

1. Write down the cash the contract actually pays. Net or gross, currency, payday, number of months, and whether a bonus is in the same sentence. Contract checklist → The ranges on first-year salaries are not that sentence.
2. Separate the US return from the foreign tax. Ask who files and pays tax in the country where you play, and get the answer in the contract. Then assume the US return still exists until a preparer tells you a specific form has reduced it.
3. Count days only if you are actually testing physical presence. Full days, midnight to midnight, not counting the ocean. A season that starts in October cannot fill 330 days in that calendar year. The 12-month period can cross New Year. The tax-home test is still separate, and a one-year-or-less assignment may stay temporary.
4. Ask the state you are leaving, not a group chat. California's 546-day safe harbor is a published number, and a single season is shorter. Your state's page may say something else, including that it has no income tax.
5. Keep the foreign account in view before it crosses $10,000 in aggregate. That is the FBAR line, and it is not the same form as Form 8938.

The map of where a first contract usually sits, if you are still choosing a league rather than reading an offer, is playing overseas after college and first-year salaries. The Australia-specific offer notes, including who files the visa, are on how to play in Australia. The free Pro Pathway Starter Kit is the short PDF of the league hierarchy and the first two Playbook chapters. It is not a tax guide.

What this page will not tell you

• The income-tax rate in a given league's country, or what a "net" deal leaves after that country's tax. We do not have a sourced rate table, and we are not building one from memory.
• Whether you personally meet the tax-home test, the 330-day test, or a state's residency test. Those turn on your days, your family, and the contract.
• Whether to elect the exclusion or the foreign tax credit. The IRS describes both, and taking the credit on income you could have excluded can revoke the exclusion.
• That a camp, an agent, or a club administrator is a tax adviser. The license check for agents is the FIBA directory. It is not a credential to prepare Form 2555.

FAQ

Do US players pay tax on an overseas basketball salary?

US citizens and residents living abroad generally file and pay estimated tax the same way as people living in the United States. The filing test uses gross income from worldwide sources, and income you exclude still counts toward that test. An exclusion or a foreign tax credit can reduce the US tax. It does not erase the filing requirement. You claim the foreign earned income exclusion on a return, with Form 2555. Leaving the salary off the return is not how the exclusion works.

What is the foreign earned income exclusion for 2026?

The IRS says the maximum foreign earned income exclusion for tax year 2026 is $132,900 per qualifying person. For 2025 it was $130,000 per qualifying person, and two qualifying spouses could exclude as much as $260,000 for 2025. You cannot exclude more than your foreign earned income. If you qualify for only part of the year, the IRS prorates the maximum by qualifying days in that year divided by 365, or 366 in a leap year. The exclusion also requires a foreign tax home and either the physical presence test or the bona fide residence test.

Can a one-season basketball player use the physical presence test?

The physical presence test is 330 full days in a foreign country or countries during any 12 consecutive months. The 330 days do not have to be consecutive, and the 12 months do not have to be a calendar year. A season that runs from the autumn into the spring sits in two tax years, so the cap for each year is prorated. A full day is midnight to midnight, and time over international waters does not count. Illness does not waive the 330 days, unless the IRS has published a waiver for war or civil unrest. Separately, an assignment you expect to last one year or less can be temporary, and a temporary assignment does not move your tax home. Both tests have to be met.

Can you claim the foreign earned income exclusion and the foreign tax credit on the same salary?

Not on the same dollars. If you exclude income, you cannot take a foreign tax credit or deduction for foreign tax on the income you excluded or could have excluded. Doing so can revoke the exclusion. You can still claim the credit on foreign earned income above the excluded amount. The credit and a deduction for the same foreign taxes are also an either-or choice. Which one leaves you with less US tax depends on the return. This page does not pick for you.

Does a net basketball contract mean the club paid your US tax?

No. On this site, net means the amount the offer says you will receive, and gross means the amount before tax and other deductions. A net deal may mean the club pays the foreign income tax. It does not mean the United States has been paid. Whether tax the club pays counts as your foreign tax, for the foreign tax credit, depends on whose legal liability it is under that country's law and the contract. Publication 514 is the IRS text. We do not decide a contract.

Do you still owe state tax if you play basketball overseas?

The federal exclusion does not answer that. States write their own resident and domicile rules. California taxes residents on all income regardless of source. Its published safe harbor treats someone domiciled in California as a nonresident if they are outside California under an employment-related contract for an uninterrupted 546 consecutive days, with exceptions, including intangible income over $200,000 in a year the contract is in effect. A single season is shorter than 546 days. Other states are different, and some do not tax wages. Use that state's own page.

Do you have to report a foreign bank account?

An FBAR (FinCEN Form 114) is required if you have a financial interest in, or signature authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during the calendar year. It is filed with FinCEN, not attached to the tax return, and it is due April 15 with an automatic extension to October 15. Form 8938 is a separate form, attached to the tax return, with higher thresholds that depend on whether you live abroad and how you file. A salary does not replace either form.