Helping Your Student-Athlete Navigate NIL Taxes with Confidence
When your child starts earning NIL (Name, Image, and Likeness) income, their financial world—and yours—can change quickly. Whether they’re being paid for endorsements, training camps, social media content, or merchandise sales, NIL income brings both opportunity and responsibility.
As a parent, you don’t need to be a tax expert—but you do need to understand the basics so you can help your student-athlete stay organized, compliant, and financially smart. This guide walks you through what to watch for, what questions to ask, and how to support your child every step of the way.
1. NIL Income Is Taxable
The most important thing to know is this: All NIL income is taxable.
Whether your child is earning money through social media, autographs, or local sponsorships, that income must be reported to the IRS. And since most NIL earnings don’t come with taxes withheld, it’s up to the student-athlete to report and pay what they owe.
2. Quarterly Taxes May Be Required
Most student-athletes who earn NIL income will need to make quarterly estimated tax payments to avoid penalties. These payments are typically due in April, June, September, and January.
Failing to pay quarterly can result in IRS fines—even if the student files their tax return on time.
3. NIL Income Can Affect Family Taxes and FAFSA
Depending on your child’s income, their tax status may change. That can affect:
- Whether you can claim them as a dependent
- Eligibility for financial aid through FAFSA
- Your household tax bracket
Talk with a qualified tax professional to determine if it’s still appropriate to claim your child as a dependent—and what steps to take if not.
4. Help Them Stay Organized
Even if your student-athlete is responsible and ambitious, they likely haven’t dealt with taxes, accounting, or business documentation before. You can help by encouraging:
- Separate bank accounts for NIL income and expenses
- Organized digital or physical folders for receipts and contracts
- A consistent system for tracking payments and mileage
Helping your child adopt good habits now can prevent major headaches later.
5. Encourage Record-Keeping and Deductions
Many NIL-related expenses can be deducted to reduce taxable income. That includes:
- Travel to promotional events
- Camera equipment for social media content
- Website and branding expenses
- Business meals and meetings
- Legal and tax services
Help your student-athlete understand the importance of tracking these costs—and what counts.
6. Consider a Business Entity
If your child is earning substantial NIL income, you may want to help them:
- Set up an LLC (Limited Liability Company)
- Apply for an EIN (Employer Identification Number)
- Open a business bank account
These steps can offer legal protection, unlock additional tax deductions, and help them present a more professional image.
7. Understand Red Flags and Scams
Not everyone who approaches your child is trustworthy. As a parent, you can play a critical role in spotting:
- Unlicensed agents or marketing reps
- Pressure to sign vague or overly broad contracts
- Promises that sound too good to be true
- Requests for personal financial information
Encourage your child to run any contract or offer by you—and ideally, a trusted tax or legal professional—before signing.
8. Guide Them to the Right Professionals
Your child may need:
- A CPA (Certified Public Accountant) or EA (Enrolled Agent) for taxes
- An attorney for contracts or business setup
- A financial advisor for budgeting and investing
Help them find professionals who understand the NIL space—not just generalists. Directories like this one can help you connect with verified tax professionals who specialize in NIL planning.
9. Promote Financial Education
Support your student-athlete in learning about:
- Budgeting and saving
- Tax planning
- Credit and debt
- Investing and long-term wealth building
NIL success can be a powerful tool for teaching financial literacy that will benefit them long after their playing days are over.
10. Stay Involved—But Let Them Lead
NIL is a learning experience. Your role isn’t to take over—it’s to guide. Ask questions, help them stay organized, and encourage wise choices. But also give them space to develop confidence in managing their own business affairs.
Summary for Parents
| What Parents Can Do | Why It Matters |
|---|---|
| Learn basic tax rules | Prevents surprises and penalties |
| Encourage organization | Helps track expenses and meet deadlines |
| Support tax payments | Reduces stress and avoids IRS fines |
| Vet professionals | Protects your child from bad actors |
| Discuss dependency status | May affect your own taxes and financial aid |
| Promote good financial habits | Prepares your child for long-term money management |
Your support and attention now can help your student-athlete make the most of their NIL opportunities—financially and responsibly. The skills they build with your guidance can serve them for a lifetime.
Let us know if you’d like help finding a tax professional in your state or someone who specializes in working with student-athletes. You’re not in this alone—and neither is your child.