After The Madness-Beware of the NIL Blues

It’s April 15th — Tax Day.

By Tanya Hughes | CEO & Founder Sportspreneurs

Introduction

While many are still recovering from the highs and heartbreaks of March Madness, a different kind of reality may be settling in for thousands of Student Athletes across the country: the NIL Blues. Over the past few months, we’ve seen a growing wave of Student-Athletes promoting products, launching brands, and cashing in on their Name, Image, and Likeness (NIL) and we’ve heard critics of how NIL is the “wild, wild, west!” But here’s something many Student-Athletes and their families didn’t realize:

NIL money is taxable.

Earnings from NIL deals are taxable income — student-athletes must report and pay taxes.

There’s no automatic withholding

NIL payments don’t deduct taxes automatically — student-athletes must plan and save proactively.

And Tax Day doesn’t care if you’re still in college.

Tax Day waits for no student.

NIL Is a Game Changer — But So Are the Taxes

We are all seeing the impact of the NCAA rule change from July 2021, in which the NCAA changed the game by allowing Student-Athletes to profit from their NIL while maintaining eligibility. For the first time ever, Student-Athletes could sign endorsement deals, promote brands on social media, appear in commercials, and more. It was a huge victory for student-athlete rights — but it also introduced a new business reality for Student-Athletes: when you get paid to endorse or promote a product, you are considered an independent contractor (IC). And independent contractors are responsible for paying taxes on their earnings.

If you earned NIL money in 2024, chances are you received a Form 1099 earlier this year. Unfortunately, most Student-Athletes (and their families) don’t realize that tax withholding doesn't happen automatically. So, if you didn’t set money aside, you might be staring down a surprise tax bill today.

My Story: From NIL Newbie to NIL Navigator

This reality hit home for me personally. In January 2024, I was serving as the Interim CEO of a national association for underserved entrepreneurs and working with other small business organizations who advocate, research and create programming to support microbusinesses. I am also an Entrepreneur and I know firsthand the importance of having tax strategies for my business. But even I was caught off guard when my son, a college football player, forwarded his tax documents to me at the end of January. I was expecting to see the usual scholarship info and a few NIL deals. Instead, it was a 1099 showing NIL income that I wasn’t aware he received and had our family known this would be the case we would’ve made some adjustments to the NIL gameplan we had for him. That moment lit a fire in me to not only sound the alarm but to also help bridge this knowledge gap for other families. Over the past year, I’ve had the opportunity to work with and provide webinars to Parents and their Student-Athletes from across the country. With the research and real-life challenges I heard from them, I created The Parent GM™ — a program that helps Parents and Student-Athletes collaborate to create an NIL strategy and navigate these NIL waters. I’m happy to share a few things that have helped my clients not be surprised by tax day!

How to Avoid the NIL Blues

If your Student-Athlete is diving into NIL opportunities, don’t let tax season catch you off guard again. Here are a few simple steps to stay ahead:

Engage a CPA and Financial Advisor Early

Find professionals who understand self-employment, small business taxes, and the NIL landscape. They can help you navigate estimated quarterly tax payments and set you up for success.

Set Aside Money for Taxes

Most small business owners pay taxes quarterly. Set aside a percentage of every NIL payment you receive — don’t wait until the end of the year.

Track All Your Expenses

Keep detailed records of any costs associated with fulfilling NIL contracts. That could be mileage to photo shoots, equipment purchases, social media management fees, or even marketing costs. These expenses may be deductible.

Collaborate with Your Student-Athlete

Know what deals they’re signing. Understand the payment terms. Make sure everyone is clear on the responsibilities that come with those payments — including taxes.

NIL: A Golden Opportunity — If You Plan Right

NIL has opened incredible doors for Student-Athletes to build a financial foundation before they ever turn pro — but only if they treat it like the business it is. With the right strategy, Student-Athletes can learn lifelong business and financial skills, laying the groundwork for life after sports and avoiding the stress of unexpected tax bills. If you want to learn more about how to gameplan for NIL success, check out Sportspreneurs, a Division of Activate International. Our Parent GM™ program and other NIL support resources are designed to equip Student-Athletes and their families with the knowledge they need to win — on and off the field.

Discover More: Visit Our Website or Reach Out

Visit www.sportspreneurs.com or email us at [email protected] to learn more.

Sportspreneurs™ is a division of Activate International, with a focus on empowering Athletes in their transition to entrepreneurship.

Quick Links

Contact Us:

[email protected]