Understanding Tax Implications of NIL Income for NCAA Student Athletes

  • Industry trends
  • 1/30/2025
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Key insights

  • Navigating the tax requirements for name, image, and likeness (NIL) deals may be uncharted territory for many NCAA athletes, and schools can only help so much.
  • Some income tax complications for student-athletes may involve residency issues, financial aid eligibility, and making estimated tax payments.
  • Schools are limited in the types of services provided to students related to NIL opportunities; recent NCAA guidance lists permissible and impermissible activities.
  • Work with a tax professional who can help you navigate the complexities of federal, state, and local tax issues that come along with NIL income.

Don’t get surprised by your NIL’s income tax requirements.

Talk to an Advisor

Name, image, and likeness (NIL) deals are becoming increasingly popular among student athletes, but they come with specific tax considerations and reporting requirements.

Gain valuable insights into the tax implications of NIL income for NCAA student athletes so you can handle your financial responsibilities effectively.

Athletes new to tax filing may need extra guidance

Tax rules apply to college athletes the same way they apply to professional athletes (or anyone, for that matter). NCAA athletes receiving payments for NIL may have federal, state, or local tax filing requirements — depending on the amount of income and where the athlete lives or goes to school.

For some student athletes, NIL income may be the first income they have ever received, so they may not be aware of their obligations to file a tax return and pay taxes on NIL earnings.

NIL deals give athletes the opportunity to gain early knowledge and experience in personal finance, budgeting, and taxation.

Most schools are beginning to put programs in place to educate student athletes about NIL — to the extent they are allowed. The NCAA limits the types of services and education schools can provide regarding legal and financial matters. Many schools advise student athletes NIL income is taxable and urge them to contact a tax professional for guidance.

Income tax basics for student athletes

NIL creates an opportunity for athletes to learn the ropes about personal finance, budgeting, and taxation at a young age. Consider some basic ground rules and potential issues:

Federal income tax (2024 amounts)

  • Single filers must file a tax return if their income exceeds $14,600.
  • Married filing jointly must file if their income exceeds $29,200.

Self-employment tax

NCAA athletes are not employees of their school and are generally not employees of the companies paying for NIL rights. Generally, athletes will be considered independent contractors by the companies who sign them to NIL deals.

Athletes must file a tax return and pay self-employment taxes if they earn $400 or more from NIL activities.

Tax forms

NIL income over $600 is generally reported on Form 1099-NEC (non-employee compensation) or Form 1099-MISC (royalties or other income).

Typically, the payor does not withhold taxes, making the athlete responsible for paying taxes on their NIL income.

Quarterly estimated tax payments

If athletes expect to owe $1,000 or more in federal taxes on their NIL income, they need to consider making quarterly estimated tax payments throughout the year to avoid interest and penalties.

Deductions

Documenting and tracking NIL-related expenses can help reduce tax liability. Common deductions include:

  • Travel expenses, including mileage
  • Professional fees (legal, accounting, advisory)
  • Agency fees
  • Advertising and marketing expenses
  • Editors or publicists
  • Equipment and supplies (cameras, video equipment)

Note: Deductibility of expenses differs for W-2 employees versus independent contractors.

Taxable income

Cash or non-cash payments and compensation (e.g., vehicles, NFTs, sports equipment, crypto) are considered taxable income and should be reported on Form 1099-NEC.

Most, if not all, payments an NCAA athlete receives will have no income taxes withheld, which means if the payment is taxable, tax will be due when the athlete’s tax return is filed (estimated taxes may be due earlier). Non-cash income may create a cash flow issue for those who don’t plan appropriately for tax payments.

State and local taxes

Consider taxes in the athlete’s home state, the state where their college is located, and the state where a promotion or appearance occurs.

Financial aid and tax credits

NIL income may impact eligibility for need-based federal financial awards and educational tax credits.

Dependent status

Families need to determine if the student athlete can be claimed as a dependent. Generally, a qualifying child under age 24 may be claimed if they provide less than half of their own support.

Pre-NIL financial aid

Some types of financial aid, such as stipends or money for room and board, are considered taxable income. Income from summer or offseason employment must also be reported.

Pending legislation

As legislation around NIL continues to develop, student athletes — especially first-time-filers — must be cautious about the potential tax implications. Changes in laws, such as the ability for schools to pay current and former students directly for NIL, can introduce new requirements and challenges, potentially affecting how NIL income is taxed and reported.

Keeping up to date with these developments is important for maintaining compliance and avoiding unexpected tax liabilities.

How CLA can help with NIL tax planning

Smart tax planning starts with knowing when to ask for guidance. For college athletes, CLA can help you take advantage of tax opportunities and stay in compliance at any stage of your career. Our tax professionals work closely with you to assess your tax situation and navigate the complexities of federal, state, and local tax issues related to NIL income.

Contact us

Don’t let the income tax requirements of your NIL deal surprise you. Complete the form below to connect with CLA.

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