When you start earning money from your Name, Image, and Likeness (NIL), it’s easy to focus on the excitement of cashing your first check. But here’s the truth: the IRS is paying attention, too. Unlike a traditional job where taxes are withheld from your paycheck, NIL income usually comes with a different set of rules—and ignoring them can cost you big.

Let’s break down how NIL income is taxed, what forms you should expect, and why staying on top of your tax obligations is just as important as your training schedule.

NIL Income = Self-Employment Income

Most NIL deals are treated as independent contractor income. This means you’re essentially running a small business, even if it doesn’t feel that way. The companies paying you won’t withhold taxes, which leaves you responsible for reporting and paying them yourself.

This includes:

• Federal income tax (based on your tax bracket)

• State income tax (if your state has one)

• Self-employment tax (15.3% covering Social Security and Medicare contributions)

The 1099-MISC and 1099-NEC Forms

At the end of the year, companies that paid you more than $600 will send you a Form 1099-NEC (Nonemployee Compensation). If you earned royalties—say, from merchandise sales—you may receive a Form 1099-MISC instead.

Key points:

• You may receive multiple 1099s if you worked with multiple brands.

• Even if you don’t receive a form (for amounts under $600), you’re still required to report that income.

• Keep track of all earnings, because the IRS will cross-check what you report against the forms they receive.

Quarterly Tax Payments: Why They Matter

Because taxes aren’t withheld from your NIL checks, you’ll need to make estimated tax payments throughout the year—usually four times (April, June, September, and January).

Failing to pay can result in:

• Penalties and interest for underpayment

• A large, unexpected bill at tax time

• Possible scrutiny or audits

Pro Tip: Set aside 25–30% of each NIL payment in a separate savings account just for taxes. That way, you’re ready when quarterly payments come due.

Deductions Athletes Should Track

The good news? As a self-employed earner, you may be able to deduct legitimate business expenses to reduce your taxable income. Examples include:

• Travel expenses for appearances

• Equipment or uniforms used for NIL activities

• Marketing costs (like website hosting or professional photography)

• Professional fees (agents, financial advisors, tax preparers)

Good recordkeeping is key—save receipts, invoices, and contracts.

Why Ignoring Taxes is a Big Mistake

The IRS doesn’t overlook NIL income just because you’re in college. Failing to report or underreporting can lead to:

• Heavy fines

• Damage to your credit

• Stressful audits that distract from your sport and studies

The bottom line: Treat NIL taxes seriously from the start.

Final Takeaway

Your NIL earnings are a blessing, but they come with real responsibilities. Expect 1099 forms, set aside money for taxes, pay quarterly if needed, and keep careful records. By handling taxes the right way, you’ll avoid penalties, stay focused on your sport, and start building long-term financial stability.