For student-athletes earning income through Name, Image, and Likeness (NIL) deals, effectively tracking expenses is crucial. Keeping detailed records helps your tax professional maximize your deductions, reducing your taxable income and saving you money. Here’s a guide to effectively track your NIL expenses.

Understanding Deductible Expenses

Before tracking expenses, understand what qualifies as deductible:

• Travel Expenses: Flights, mileage, hotels, meals during business travel.
• Training Costs: Personal trainers, facility rentals, specialized coaching.
• Equipment and Supplies: Athletic gear, uniforms, cameras, software, and more.
• Marketing Expenses: Social media ads, branding, graphic design, website fees.
• Professional Fees: Payments to agents, lawyers, accountants, or business consultants.

Create a Dedicated Account

Open a separate bank account specifically for your NIL activities. Using a dedicated account streamlines expense tracking and clearly separates business and personal finances, making your financial records clearer for your tax pro.

Use Digital Tools for Tracking

Leverage digital tools and apps to track your expenses easily and accurately. Applications like QuickBooks, Mint, Expensify, or even simple spreadsheet tools like Excel or Google Sheets allow you to record and categorize expenses on the go.

Keep Detailed Receipts and Records

Maintain thorough documentation for all expenses:

• Scan or photograph receipts immediately.
• Note details on receipts (purpose, date, location, participants).
• Save digital copies securely in organized folders (cloud-based storage recommended).

Track Mileage Accurately

Use mileage tracking apps like MileIQ or Everlance to record business travel accurately. These apps automate mileage tracking, ensuring you capture all eligible deductions without hassle.

Regularly Review and Categorize Expenses

Consistently review and categorize your expenses (weekly or monthly) to avoid year-end confusion. Proper categorization (travel, marketing, equipment, etc.) simplifies your tax preparation process and ensures your deductions align correctly.

Communicate Regularly with Your Tax Pro

Stay in regular contact with your CPA or tax professional throughout the year, not just during tax season. Periodic check-ins ensure you’re capturing all potential deductions and maintaining proper documentation.

Stay Informed About Tax Regulations

Tax rules and regulations can change frequently. Regularly consult with your tax professional or trusted resources to stay updated on any changes impacting your NIL-related deductions.

Set Aside Funds for Taxes

Remember, NIL income often does not have taxes withheld upfront. Set aside approximately 25-35% of your earnings to cover potential tax obligations, avoiding financial surprises at tax time.

Final Thoughts

Efficiently tracking your NIL expenses ensures you maximize eligible tax deductions, enhancing your financial success. By staying organized, leveraging technology, and partnering closely with your tax professional, you’ll navigate NIL tax obligations confidently and effectively.