Top Questions We Get From New NIL Athletes

1. Do I have to pay taxes on my NIL money?

Yes. The IRS treats NIL income as self-employment income, which means it is fully taxable at the federal level and in most states. It does not matter if you received cash, free products, or a gift card. If it has monetary value, it is taxable.

2. How much should I set aside for taxes on NIL income?

A good starting rule is 25 to 30 percent of every payment. That covers federal income tax, self-employment tax (which runs around 15.3%), and state income tax. Set that amount aside in a separate account before you spend anything else.

3. Do I have to pay taxes more than once a year?

Yes. If you expect to owe more than $1,000 in taxes, the IRS requires you to make quarterly estimated payments throughout the year. The four due dates are April 15, June 15, September 15, and January 15. Missing these payments can trigger an underpayment penalty even if you pay your full balance by Tax Day.

4. Will my NIL brand deal come with a 1099?

It depends on who paid you and how much. Businesses that pay you $600 or more in a calendar year are required to issue a 1099-NEC. However, you are responsible for reporting all of your income whether or not you receive a 1099. Do not wait on a form to know what you owe.

5. What expenses can I deduct as an athlete?

If you are earning NIL income or are a professional athlete, legitimate business expenses can offset your taxable income. Common deductions include agent and advisor fees, content creation equipment (camera, lighting, laptop), travel for brand activations and appearances, a home office used exclusively for your business, sports training costs tied to your profession, and professional development expenses.

6. Do I need an LLC?

Not necessarily right away. If your NIL income is under $20,000, a sole proprietorship with a dedicated business bank account may be enough to start. Once you are consistently earning $40,000 to $50,000 or more per year, an LLC with an S-Corp election can generate meaningful tax savings. Talk to a CPA before setting one up so the structure actually works in your favor.

7. What if I earned NIL money or played games in multiple states?

You may owe taxes in each state where you earned income. This is sometimes called the "jock tax" and it applies to both college and professional athletes. Each state has different rules and thresholds, so multi-state tax situations are one of the most important reasons to work with a CPA who specializes in athletes.

8. Can I deduct my training and workout costs?

It depends on your situation. For professional athletes, training costs that are ordinary and necessary to your profession can be deductible. For NIL athletes, the deductibility is stronger when your training is directly tied to your business activity (for example, if your fitness brand requires you to maintain a certain level of performance for content or appearances). Keep records and discuss specifics with your CPA.

9. What happens if I ignore my NIL taxes?

The IRS does not forget. If you underpay or fail to file, you can face penalties, interest charges, and back taxes that add up quickly. Some athletes are surprised by a five-figure tax bill they were not prepared for. The solution is simple: set aside your 25 to 30 percent, make quarterly payments, and file on time every year.

10. When should I hire a CPA who specializes in athletes?

Before your next deal closes. Many athletes wait until April and miss months of planning opportunities. The best time to engage a CPA is when you are just starting to earn NIL income, before you sign a significant contract, or anytime you are dealing with multiple income streams, multiple states, or considering an LLC. Early planning is almost always less expensive than fixing problems after the fact.

Have a question not answered here? Athlete's Tax works exclusively with college and professional athletes to help them keep more of what they earn. Schedule a free consultation at athletestax.com.