How Student-Athletes Can Save on Taxes by Tracking NIL Expenses
Earning income through NIL (Name, Image, and Likeness) deals is exciting, but come tax time, every dollar you keep matters. The good news? As a self-employed earner, you may be eligible to deduct certain business-related expenses—if you track and document them properly.
Understanding which expenses qualify, how to track them, and how to stay compliant with IRS rules can make a big difference in your total tax bill. This page provides essential deduction tips tailored specifically for student-athletes navigating the NIL landscape.
Why Deductions Matter
When you receive NIL income, it’s usually reported as self-employment income. That means you’re responsible for paying federal income tax, state tax, and self-employment tax. But you can reduce your taxable income by claiming legitimate business deductions. The more you deduct (accurately and honestly), the less you owe.
Chart: Common Deductible NIL Expenses
| Expense Category | Examples | Deductible? | Notes |
|---|---|---|---|
| Travel & Lodging | Hotel, airfare, rideshare to NIL-related events | Yes | Must be directly tied to NIL activity |
| Equipment | Cameras, lighting, editing software, microphones | Yes | For content creation or promotional use |
| Apparel & Uniforms | Custom gear worn for NIL content | Yes | Only if not suitable for everyday wear |
| Marketing & Promotion | Website fees, graphic design, social media ads | Yes | Promotional use only |
| Legal & Tax Services | Lawyer or CPA who reviews contracts or files taxes | Yes | Services must relate to NIL or business setup |
| Phone & Internet | Portion used for NIL-related content and business | Partially | Must document usage percentage |
| Meals | Business meals during NIL trips or meetings | 50% | Requires receipts and purpose |
Key Tip #1: Track Everything, Immediately
Start a system now—don’t wait until the end of the year. Use a spreadsheet, accounting app, or folder to track:
- Receipts (paper or digital)
- Contracts and communications
- Mileage logs for NIL-related travel
- Screenshots of social media posts tied to NIL activities
If you can’t prove it, you probably can’t deduct it.
Key Tip #2: Keep NIL Finances Separate
Set up a dedicated checking account or debit card for NIL-related income and expenses. Keeping your personal and NIL money separate makes it easier to:
- Track deductible expenses
- Stay organized at tax time
- Avoid mixing personal and business spending
This step also helps if you decide to form an LLC or other business entity in the future.
Key Tip #3: Don’t Deduct the Wrong Things
Just because you spent money doesn’t mean it’s deductible. Be cautious with:
- Clothing you wear off the field (if it’s suitable for everyday use, it’s not deductible)
- Personal travel combined with NIL work (you can only deduct the business portion)
- Food for friends or family (unless it’s a documented business meeting)
When in doubt, consult a qualified tax advisor.
Chart: Deductible vs. Non-Deductible Comparison
| Expense | Deductible? | Notes |
|---|---|---|
| Nike hoodie for a video shoot | No | Clothing must not be suitable for everyday wear |
| Custom jersey for an NIL commercial | Yes | Must be part of your promotional content |
| Meal with brand representative | Yes (50%) | Must document purpose and keep receipt |
| Travel to visit family during break | No | Unless tied directly to an NIL event or activity |
| Flight to brand-sponsored NIL camp | Yes | Travel must be business-related |
| Phone bill used for TikTok promotions | Partial | Deduct the percentage used for NIL-related content |
Key Tip #4: Understand the Hobby vs. Business Rule
If you earn NIL income occasionally and don’t actively try to make a profit, the IRS may classify it as a hobby—which disallows deductions. To be considered a business:
- You must show a profit motive
- You should track income and expenses
- You must operate in a professional, organized manner
Running your NIL activities like a business helps preserve your right to claim deductions.
Key Tip #5: Consider Business Formation
If your NIL income is growing, talk to a tax professional about setting up a business entity like an LLC or S-Corp. Doing so could allow for:
- More structured record-keeping
- Access to additional deductions
- Long-term tax planning benefits
Just remember, business structures come with administrative responsibilities and possible setup costs.
Key Tip #6: File on Time and Save Documents
You don’t have to mail in receipts with your tax return, but you do need to keep records in case of an audit. Save:
- Receipts and invoices
- Bank and credit card statements
- Written records of meetings, deals, and contracts
Keep these documents for at least three years after you file.
Takeaway: Deductions Are Your Defense
You work hard for every NIL dollar you earn. Don’t let unnecessary taxes eat away at your income. Deductions are the legal way to reduce what you owe, but they require discipline, documentation, and a smart system from day one.
When you start treating your NIL income like a business, you’ll put yourself in a position to:
- Save money
- Stay compliant
- Build long-term wealth
If you’re unsure about which deductions apply to you or want help organizing your records, check out our directory of tax professionals who understand the unique needs of student-athletes in the NIL era.