- Days left

Price of Victory: Phil Mickelson Hit With 61% Tax Bite on UK Winnings

×
Scott Heppell/APPhil Mickelson of the United States plays out of a bunker on the 15th hole during the third round of the British Open Golf Championship at Muirfield, Scotland, on July 20.
Phil Mickelson had a last round for the history books at the British Open, and now he's got a tax bill to match.

Mickelson, a 43 year-old Californian, won golf's oldest tournament by birdying four of the last six holes. His prize for this impressive feat: £945,000, or $1.43 million. The week before, "Lefty" -- as the normally right-handed Mickelson is called, for his left-handed swing -- won the Scottish Open, bringing his total winnings for two weeks of play in the UK to £1,445,000, or about $2,167,500.

But as K. Sean Packard, an expert on pro athletes' taxes, writes at Forbes, Mickelson won't be taking home nearly that much:

The United Kingdom, which has authority to set Scotland's tax rate until 2016, graduates to a 40% tax rate when income hits £32,010 then 45% when it reaches £150,000. Mickelson will pay £636,069 ($954,000, or 44.02%) on his Scottish earnings.

On top of that, Mickelson has to pay UK tax on a portion of his endorsement earnings in Scotland. Any bonuses he receives for winning these tournaments and moving up in the rankings will also be taxed at 45 percent. And Mickelson's endorsement income isn't chump change: As Packard notes, Roger Federer and Tiger Woods (whom Mickelson defeated at the Open) are the only athletes who earn more in this category.

And that doesn't exhaust Michelson's tax liabilities from his British triumph. He won't have to pay federal taxes on these winnings, thanks to a foreign tax credit, but the exemption doesn't apply to self-employment taxes, the Medicare surtax, or his home state of California's 13.3 percent take.

It all adds up to a rate of 61.12 percent -- right around the onerous amount Mickelson famously groused about in January: "There are going to be some drastic changes for me because I happen to be in that zone that has been targeted both federally and by the state and, you know, it doesn't work for me right now."

Perhaps thinking of his good-guy image, and those lucrative endorsement deals, Mickelson felt compelled to apologize for having vented his spleen: "Finances and taxes are a personal matter," he said in a statement, "and I should not have made my opinions on them public." One can only imagine how Mickelson feels now, contemplating a take-home rate of 30 percent (Packard's calculation, subtracting tax-deductible expenses from a post-tax net of $842,700).

Increase your money and finance knowledge from home

Intro to Retirement

Get started early planning for your long term future.

View Course »

Basics Of The Stock Market

Stock Market 101 - everything you need to know but were afraid to ask!

View Course »

TurboTax Articles

Are You Exempt From Health Care Coverage?

The Affordable Care Act, or Obamacare, is an individual mandate that requires all eligible Americans to have some form of basic health coverage by 2014. Those without insurance will receive a penalty when they file their tax returns ? that is, unless they have an exemption. TurboTax's Exemption Check can help you find out whether or not you qualify for an exemption.

Essential Tax Forms for the Affordable Care Act

The Affordable Care Act (ACA), also referred to as Obamacare, affects how millions of Americans will prepare their taxes in the new year. The law now includes penalties for all who haven?t obtained health insurance -- and those penalties are expected to be paid at tax time. The ACA also provides tax credits to help people pay for insurance, and you can claim those credits when you file your taxes. The Internal Revenue Service (IRS) has introduced a number of tax forms to accommodate the ACA.

Mortgage Refinance Tax Deductions

When refinancing a mortgage to get a lower interest rate or obtain more favorable loan terms, you're really just taking out a new loan and using the money to pay off your existing home loan. In general, the same tax deductions are available when you're refinancing a mortgage as when you're taking out a mortgage to buy a home.

How to Determine if You Have Minimum Essential Coverage (MEC)

The Affordable Care Act, also known as Obamacare, requires most Americans to have health insurance that meets a government standard known as "minimum essential coverage," or MEC. Whether your insurance qualifies as MEC depends not on the plan itself, but on how you obtained your coverage.

Rental Property Deductions You Can Take at Tax Time

Rental property often offers larger deductions and tax benefits than most investments. Many of these are overlooked by landlords at tax time. This can make a difference in making a profit or losing money on your real estate venture. If you own a rental property, the IRS allows you to deduct expenses you pay for the upkeep and maintenance of the property, conserving and managing the property, and other expenses deemed necessary and associated with property rental.

Add a Comment

*0 / 3000 Character Maximum

629 Comments

Filter by:
Doris

Tiger moved to FL to escape these taxes, why can't anyone else?

July 23 2013 at 11:12 PM Report abuse rate up rate down Reply
1 reply to Doris's comment
ret31155

Tiger gets a pass because he isn't white.Phil has no such right.

July 24 2013 at 2:10 AM Report abuse rate up rate down Reply
James G. Banks

61%. What a bunch of thieves.

July 23 2013 at 9:31 PM Report abuse -1 rate up rate down Reply
fvklong

You people that agree with tax rates this high are sick in the head. No government or any other entity for that matter should have the power to take 61 percent of anyone's money.

July 23 2013 at 8:54 PM Report abuse +1 rate up rate down Reply
1 reply to fvklong's comment
ret31155

The people that agree with these rates don't have to pay them.

July 24 2013 at 2:12 AM Report abuse rate up rate down Reply
kellyr0203

I turn the channel anytime I see the whiny rich dude! He makes me sick and i don't care to add to his income in anyway, even a commercial! He's a grade A ah. Money grubber. Don't watch him and add to his grubby selfish stingy ego.

July 23 2013 at 8:33 PM Report abuse rate up rate down Reply
2 replies to kellyr0203's comment
Myrna

He's a grade A ah. Money grubber.

That's not true. Mickelson gives generously to charity, is generous with friends, and tips generously in restaurants. Yu can check this out online, As for the high taxes, I suggest Phil find a new accountant to help him lower and defer his high tax bill. Maybe he can gift his wife with a dressage horse a la Mitt Romney.

July 23 2013 at 9:09 PM Report abuse -2 rate up rate down Reply
1 reply to Myrna's comment
h.hughjardon

Does lefty's wife have MS as well?

July 23 2013 at 11:02 PM Report abuse -1 rate up rate down
ret31155

Phil's money is peanuts compared to the fortune that Obama is amassing at our expense.

July 24 2013 at 2:13 AM Report abuse rate up rate down Reply
juststeve35

Awwwwwwwwwwwwwwww....

How does anyone expect him to be able to make ends meet by only taking home a million bucks???

A tragedy....

July 23 2013 at 8:24 PM Report abuse +1 rate up rate down Reply
1 reply to juststeve35's comment
h.hughjardon

I would say having 61% of your earnings confiscated is a tragedy, regardless of your income.

July 23 2013 at 8:51 PM Report abuse rate up rate down Reply
Sean

hey all these greedy rich people don't need all that money right? Take from the rich and give to the poor I say. Robbery by any other name is still robbery.

July 23 2013 at 8:04 PM Report abuse +1 rate up rate down Reply
cheekweld

Cry me a river he still takes home over $800000.00 for 2 weeks play time.

July 23 2013 at 6:22 PM Report abuse +1 rate up rate down Reply
mclaramc3

I am sure he will deal with it, he is someone who plays by the rules.

July 23 2013 at 5:35 PM Report abuse rate up rate down Reply
duey35

The government just got a hole in one.
And they are just darn proud of it.

July 23 2013 at 5:22 PM Report abuse -1 rate up rate down Reply
ginnpr1

Do any of you think he really cares - he won the British Open and that is his concern - I am sure it is not $$$

July 23 2013 at 3:37 PM Report abuse rate up rate down Reply
1 reply to ginnpr1's comment
Jeremiah

Ginn: Of course he cares! What are youthinking? Phil has stated before that this stinks, and I for one understand why. Ginn, how would you like to receive only 30 cents out of every dollar you earn?

July 23 2013 at 4:27 PM Report abuse +1 rate up rate down Reply