What Every Student-Athlete Needs to Know About NIL and Taxes
If you’re earning money through NIL deals, you’re officially a business in the eyes of the IRS. Whether it’s from brand partnerships, social media, camps, or merchandise, the income you receive is taxable. This guide lays out the tax basics every student-athlete and family needs to understand before tax season hits.
Next Tax Deadline Is Coming Fast
The IRS doesn’t wait. If you’re earning NIL income, your next quarterly tax deadline may be just weeks away. Get ahead before penalties and late fees start stacking up.
Understanding NIL Income
When you’re paid for your name, image, or likeness, it’s considered self-employment income. That means no taxes are taken out upfront—you’re expected to handle that yourself.
You’ll usually receive a 1099-NEC instead of a W-2. It’s your responsibility to track that income and report it accurately to the IRS.
Common NIL Income Sources
| NIL Activity | Is It Taxable? | Typical Tax Form |
|---|---|---|
| Brand Sponsorships | Yes | 1099-NEC |
| Social Media Deals | Yes | 1099-NEC |
| Merchandise Sales | Yes | None |
| Paid Appearances | Yes | 1099-NEC |
| Autograph Signings | Yes | 1099-NEC |
| Training Camps | Yes | 1099-NEC |
Tracking NIL Expenses
As a business owner, you’re allowed to deduct business expenses—but only if you keep good records. That means tracking your spending and saving receipts from day one.
Deductible NIL Expenses
| Expense Type | Deductible? | Notes |
|---|---|---|
| Travel for Promotions | Yes | Flights, hotels, rideshare, gas |
| Equipment Purchases | Yes | Cameras, tripods, gear for content |
| Legal or Tax Help | Yes | Must be related to NIL activities |
| Marketing Tools | Yes | Website, branding, digital ads |
| Phone and Internet | Partially | If used for NIL work — document use |
Quarterly Taxes: What You Need to Know
Most student-athletes earning NIL income will owe quarterly estimated taxes. These are payments sent to the IRS four times a year to stay current on what you owe.
If you don’t pay on time, you could face:
- Late penalties
- Interest charges
- IRS letters you’d rather not receive
Set Aside a Portion of Every Payment
Because no one is withholding taxes from your NIL checks, you need to plan ahead.
How Much Should You Save?
| NIL Payment | Save 25% | Save 35% |
|---|---|---|
| $500 | $125 | $175 |
| $2,000 | $500 | $700 |
| $7,500 | $1,875 | $2,625 |
| $15,000 | $3,750 | $5,250 |
The more you earn, the more you should be prepared to save. Use a separate account to keep your tax money untouched.
Multi-State Tax Considerations
You might owe state income taxes based on:
- Where you live
- Where your school is located
- Where your NIL deal took place
That’s right—you might owe in more than one state. Filing in multiple states can be tricky, which is why many athletes work with tax professionals who understand this space.
Do You Need an LLC or S-Corp?
As your NIL income grows, you may want to consider forming a business entity like an LLC or an S-Corp. These structures can help with:
- Legal protection
- Tax savings
- Professional branding
But they also come with additional responsibilities, like business bank accounts, separate tax filings, and more paperwork.
Talk to a tax advisor before making this move.
Final Tips for Athletes and Families
- Track every dollar you earn and spend
- Save 25%–35% of your income for taxes
- Know your tax deadlines
- Work with a professional who understands NIL rules
- Don’t assume someone else is handling it for you
Tax mistakes can hurt your eligibility, your refund, and your long-term finances. The earlier you take this seriously, the better your outcome will be.
For Parents
If your student-athlete is earning NIL income, it could affect:
- Whether they can still be claimed as a dependent
- Financial aid and FAFSA eligibility
- Your family’s tax bracket and planning strategy
It’s important to coordinate as a family and involve a trusted tax professional who understands the NIL space.
Taking charge of your NIL taxes doesn’t have to be scary. Start with the basics. Get organized. Ask questions. And when in doubt, work with someone who’s done this before.
Your NIL opportunity is real—and so is the responsibility that comes with it.