Your First Tax Season with NIL Income: What to Expect

Navigating your first tax season after signing Name, Image, and Likeness (NIL) deals can feel overwhelming. With new income streams come new responsibilities, and being prepared helps you avoid costly mistakes. Here’s what every student-athlete should know when filing taxes for the first time with NIL earnings.

Receiving Form 1099

Most NIL payments classify you as an independent contractor, not a traditional employee. That means you’ll likely receive IRS Form 1099 from every business or individual that paid you $600 or more during the year. These forms report your earnings and must be included in your tax return.

Calculating Self-Employment Taxes

Unlike a regular job where your employer withholds taxes, you’re responsible for paying self-employment taxes—covering both the employer and employee side of Social Security and Medicare. This adds up to about 15.3% of your earnings, which can be a surprise if you don’t plan ahead.

Tracking Multiple Income Sources

Your NIL deals might include endorsements, appearances, merchandise sales, social media promotions, or royalties. You’ll need to track every dollar and document each source. Good record-keeping now saves headaches later—and reduces the risk of IRS issues.

Understanding Deductible Expenses

One of the advantages of being self-employed is the ability to deduct business expenses. Common NIL write-offs include:

• Travel for appearances or promotions

• Sports equipment or training tools

• Marketing and branding costs

• Agent or legal fees

• Promotional content creation

Accurate receipts and logs make it easier to lower your taxable income.

Filing Multi-State Taxes

Did you get paid for appearances in different states? If so, you may need to file multiple state tax returns. Every state has unique rules and tax rates, so understanding these requirements early helps you stay compliant and avoid penalties.

Making Quarterly Estimated Payments

If this is your first NIL tax season, you may owe a large lump-sum payment in April. Going forward, plan to pay quarterly estimated taxes. This not only avoids penalties but also spreads your tax burden throughout the year—making it easier to manage.

Seeking Professional Guidance

NIL taxes are complicated, and not every tax preparer understands the rules. Your first year is the perfect time to work with a CPA, EA, or tax-savvy financial advisor experienced in NIL income. They’ll help you maximize deductions, avoid costly errors, and create a long-term strategy.

Handling IRS and State Notices

If you receive a letter or notice, don’t panic. Many issues can be resolved quickly with the help of a professional. The key is responding promptly and providing accurate documentation.

Planning Ahead for Next Year

Think of your first tax season as training camp. What you learn now—tracking expenses, saving for taxes, working with professionals—sets the tone for smoother filings in the years ahead.

Final Thoughts

Your first NIL tax season doesn’t have to be stressful. With preparation, organization, and professional guidance, you’ll not only stay compliant but also build smart habits that protect your money and strengthen your future—both on and off the field.