NIL Contracts and College Athlete CPA Columbus Ohio
We make taxes easy for NIL college athletes
Student Athletes With NIL Deals - Don’t get surprised by taxes
Name, Image, and Likeness has burst onto the collegiate sports scene over the last few years and students are facing unforeseen problems they may not have expected – like setting aside a portion of their NIL deal for taxes. As an athlete, preparation is paramount to your success, both on and off the field. Hogan CPA Financial Services works with athletes here in Columbus and can help you and your family navigate the off-field part as laws and regulations are both complicated and changing regularly with the evolving regulations around NIL agreements.
Managing your finances with Hogan CPA, a QuickBooks ProAdvisor
1. Sponsorship/service income
Sponsorship and service revenue is one of the most frequent types of payment given to student athletes under NIL contracts. This kind of contract obligates the athlete to market products or companies at an event for which they are compensated.
2. Cash awards
Cash awards may be required from NIL revenue to disclose what the student-athlete will receive annually from the organization they represent.
- The student’s taxable income must include such a payout.
- Notably, no income taxes will be withheld from these earnings, which differ from W-2 pay.
- Athletes would be obliged to file returns and would be taxed on both their income and their self-employment.
- The student-athlete would may be required to pay such revenue in quarterly estimated tax payments.
3. Royalty income
Royalty payments are rewards for using NIL on media, including video games.
Income from royalties is counted toward the athlete’s taxable income.
Athletes are not obligated to advertise the sponsor’s brand or products.
4. Non-cash NIL benefits
Non-cash NIL benefits may qualify as taxable income and ought to be taken into consideration. For instance, if the student-athlete receives payment for signing autographs, appearing in commercials, or using their image on social media – in a non-cash payment, they must inform the school program and report this payment as gross revenue. Non-cash payments would include items “gifted” to the athlete for their services which could include clothes, meals, equipment, electronics, jewelry, cars, and more. If these items add up to over $600 in a single tax year, the business will need to send the athlete a 1099.
Tax Planning for the NIL College Athlete
Student-athletes benefit from the name, image, and likeness (NIL) contracts they sign. An interim rule that suspends the previous restriction and allows student-athletes to enter into NIL agreements and receive compensation for using their name, image, and likeness. This has been put in place by the NCAA Board of Governors and State legislatures throughout the country. This compensation, which may be monetary or non-monetary, is subject to significant federal and state taxes.
Federal Taxes
Just like any employee or business with revenue, an NIL athlete will need to report their income to the government. Often this will come in the form of Form 1099-NEC from various brand contracts. These will be taxed similar to self-employment which can include social security, medicare, and more.
State Taxes
Marquee student-athletes earning NIL deals are often taking their talents out of their home state and moving across the country. This makes for a complex state tax situation as often state taxes are paid to your home state. Since the athlete will be earning income in one state while their “home state” is elsewhere, you will have to carefully navigate the domicile and statutory residency rules to ensure you are paying the right amount of state taxes and don’t get any big surprises.
Hogan CPA and Accounting Services for the NIL Collegiate Athlete
With the ever-changing regulations involved with name, image, and likeness in collegiate sports, it’s important to keep up-to-date on all policy changes to ensure you’re protecting yourself from an unexpected tax burden. As a certified public accountant with more than 10 years of experience and a life-long sports fan, NIL is something we’re interested both professionally and as a fan. We:
- understand the nuances of accounting
- help them maintain their books while they study for exams
- we collaborate and strategize for taxes
- help them make tax-efficient business decisions that can benefit them for years to come.
What our NIL Athlete Accounting and Tax clients are saying
NIL Athlete Accountant
We have used Hogan CPA services for years and have had the best experiences. From the buying and selling of land, houses and other financial investments, to getting married and having kids; we have never had to worry about anything. Chris’ attention to detail is reassuring and impressive. I will continue not only to utilize them personally but also refer friends, family and businesses to them.
Michelle Bowden
"The experience with Hogan CPA has been great! I will resort to their service every year for the time to come."
Dawson Gore
"As a manager, I don't have a good understanding of my taxes. Fortunately, I have Hogan CPA experts always by my side."
Chris Fields
"At Hogan CPA, I found serious and skilled professionals and a reassuring respect for confidentiality."
Brady Houseman
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See our Frequently Asked Questions below for commonly asked questions about NIL deals and taxes.
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Nil College Athlete CPA Accounting FAQs
Are NIL Deals Taxable?
College athletes can earn various forms of compensation through NIL activities, such as: cash payments for services, gift cards, merchandise (e.g., clothing, equipment, electronics), and more.
Taxable income is any net revenue derived from NIL operations, including non-cash payments. Even if a company gives an athlete something free in exchange for an endorsement, the money is still taxable. The fair market value of those items must be included by the athlete in their taxable income.
How can athletes use NIL to earn money?
A college athlete might earn money by selling the right to use their name, likeness, or picture. Personal enterprises, social media, promotional appearances, signing signatures, and other endeavors are examples of these activities. College athletes frequently rely on sponsorship deals with brands and social media to supplement their income.
Athletes currently earn thousands of dollars each semester from these endorsements, and some earn even more.
What Is NIL (Name, Image & Likeness)
Under the NCAA’s NIL policy, students may receive compensation for the use of their name, likeness, or image. This rule enables college athletes to make money, establish their own brands, and get offers for partnerships and endorsements prior to starting their professional careers.