August Tax Update: The 2026 FIFA World Cup & What the Tax Rules Mean for You
The 2026 FIFA World Cup spanned 11 U.S. cities across 9 states – and with it came a set of international tax obligations that caught many foreign participants off guard. For any organization with cross-border income exposure, these rules reflected broader compliance patterns worth understanding.
The 30% Default Withholding Rate Still Applies
Foreign athletes and entertainers performing in the U.S. face a flat 30% federal withholding tax on gross U.S.-source income, including prize money, appearance fees, endorsement payments tied to U.S. events, and image rights. A tax treaty or Central Withholding Agreement (CWA) can reduce this rate – otherwise, 30% applies.
Read more: IRS Taxpayer Advocate Service — Tax Playbook for Foreign Participants
Federal Exemptions Applied to Teams, Not Individual Players
The IRS recently relieved qualifying foreign FIFA World Cup 2026 participating member associations from filing annual Form 990 information returns when their only U.S.-source income is related to World Cup competition. Individual players are not covered by this relief.
Read more: IRS grants filing relief for 2026 FIFA World Cup participants
Tax treaty status played a significant role in determining each player’s U.S. tax exposure. Players from countries with U.S. treaty structures benefited from reduced withholding rates and mechanisms to offset double taxation. Players from non-treaty countries faced full U.S. tax liability with no offset mechanism, increasing the risk of double taxation on the same income.
Read more: IRS Taxpayer Advocate Service — Tax Playbook for Foreign Participants
State “Jock Taxes” Created a Second Layer of Exposure
Federal exemptions did not carry over to the state level. Athletes paid tax in every state where they competed, calculated using a duty-days apportionment formula. Key state rates included California (up to 13.3%), New York (up to 10.9%), and New Jersey (up to 10.75%).
Texas and Florida imposed no personal income tax, while Florida, Georgia, and Missouri all issued tax waivers.
Read more: Accounting Today — World Cup Players Face Tax Penalties
Central Withholding Agreements Reduced Exposure
A CWA, filed via Form 13930, allowed athletes to negotiate a reduced withholding rate based on projected net income rather than gross income. The filing deadline was 45 days before the first U.S. performance – approximately April 27, 2026. Athletes who missed the deadline faced the default 30% withholding rate, though treaty exemptions or reduced treaty rates may still have applied.
Read more: SW Accounting – 2026 FIFA World Cup Tax Guide
Withholding Agents Carried Direct Liability
National federations, sponsors, and U.S.-based event organizers served as withholding agents under U.S. law. If they failed to withhold correctly, the IRS held them – not the athlete – liable for unpaid tax, penalties, and interest.
This exposure extends well beyond sports. Any organization making payments to foreign individuals or entities faces the same withholding obligations under U.S. tax law.
Form 1040-NR & Form 1120-F: Understanding U.S. Filing Requirements
Foreign individuals and businesses that earn U.S.-source income may have U.S. tax filing obligations. Nonresident individuals generally use Form 1040-NR, while foreign corporations typically file Form 1120-F to report U.S. income, claim applicable deductions, and reconcile taxes paid. Understanding these requirements can help avoid compliance issues and identify potential refund opportunities.
Read more: The Tax Playbook for Foreign Participants in the 2026 FIFA World Cup
Foreign Payee Compliance: Key Actions for Organizations
- Identify all foreign payees: Review contracts, vendor lists, and payment records to flag any individuals or entities without U.S. tax status.
- Collect the right documentation: Form W-8BEN or W-8BEN-E must be on file before any payment is issued.
- Apply the correct withholding rate: The default rate is 30%. Treaty rates require proper documentation and eligibility review.
- File required information returns: Form 1042 and Form 1042-S must be filed accurately and on time.
- Review agreements before payments are made: CWAs and other mechanisms to reduce withholding required advance planning.
The IRS has increased scrutiny of withholding compliance in recent years. Contact our tax team today to review your cross-border payment obligations.
