Key insights
- If you earn name, image, and likeness (NIL) income, you may owe taxes sooner than you expect, so tracking what you’re paid and setting money aside early can help you avoid costly surprises later.
- Your NIL earnings, scholarships, and tax forms can overlap in ways that make your financial picture more complicated, so staying organized from the start can save time and stress.
- If you travel, work in multiple states, or are an international student-athlete, your tax situation may become more complex quickly, which makes it worth asking questions before problems build.
- NIL income can do more than cover current expenses when you use it thoughtfully, because early planning can help you build savings, support future goals, and create longer-term opportunities.
Turn your NIL earnings into a stronger financial start.
Name, image, and likeness (NIL) income can affect more than your bank account. For many student-athletes, NIL deals are one of their first chances to manage real earnings and the related responsibilities.
Taking time to understand NIL impact on taxes, recordkeeping, scholarships, and longer-term planning can help you make thoughtful decisions and get more value from what you earn.
What should student-athletes know about financial planning for NIL deals?
Start with the basics: NIL income is taxable
One of the biggest surprises for student-athletes is NIL income is typically taxable. Athletes are treated as independent contractors rather than employees. That means taxes are usually not withheld from payments.
For some athletes, filing requirements can start sooner than expected. Even relatively small amounts of self-employment income can trigger a filing obligation.
The bottom line: It’s up to you to track income, report it correctly, and plan for what you may owe.
Know which tax forms may show up in NIL deals
Student-athletes earning NIL income may receive a mix of tax documents, depending on how they’re paid and what other funds they receive.
Common forms include:
- Form 1099-NEC for NIL compensation
- Form 1099-K from payment platforms
- Form 1098-T for tuition and scholarships
Each form plays a different role, and your tax picture often includes more than one type of income. Keeping everything organized from the start can save time and stress later.
Not all scholarship money is tax-free
It’s a common misconception that scholarships are fully tax-free, but that’s not always the case.
Scholarships are only tax-exempt when used for qualified education expenses like tuition, required fees, books, and supplies. Amounts used for room and board may be treated differently and can become taxable depending on your overall income.
When NIL income enters the picture, it can shift your filing requirements. Even athletes who didn’t previously need to file may now have a more complex tax situation.
Keep business structure in perspective
Once NIL income starts coming in, many athletes ask whether they should form an LLC. That can be beneficial in some situations, but it’s not helpful for everyone.
An LLC can help with organization, contracts, and liability protection. However, it doesn’t automatically reduce your taxes. In many cases, income still flows through to your personal tax return.
More advanced options, such as an S corporation election, may offer tax advantages at higher income levels, but they also come with added responsibilities. Tax structure decisions should reflect income level, goals, and long-term plans.
Multi-state taxes can come into play faster than expected
State and local taxes for college athletes can become more complex once NIL activity crosses state lines.
Athletes are typically paid for specific activities — appearances, events, promotional work, or content creation — and where those activities take place may affect where income is taxed. Even a single out-of-state event can create a filing requirement.
That doesn’t mean every athlete needs multiple state returns right away. It does mean you should keep good records of where you travel, what you’re doing, and which deals are tied to those activities.
International athletes face added restrictions
International student-athletes often have another layer to consider: immigration rules.
For students on F-1 visas, earning income in the United States can involve additional restrictions. NIL opportunities need to be structured carefully, and in some cases, income may need to be treated differently, such as royalties or activity performed outside the country.
This is an area where tax and immigration considerations intersect, so it’s important to pause before signing agreements or accepting payments. What works for a domestic student-athlete may not apply here.
Track expenses from day one
Good recordkeeping is one of the simplest habits you can build early. Because NIL income is often treated as self-employment income, certain business-related expenses may be deductible:
- Professional services (legal, accounting, agent fees)
- Training-related costs (specialized coaches, equipment)
- Content creation tools (cameras, video equipment)
- Travel or mileage (tied to business activity such as driving to workouts)
Save for taxes before you spend
Since taxes usually aren’t withheld from NIL income, setting money aside early is critical. A simple habit like putting away a percentage of every payment can help you avoid surprises at tax time. The right percentage will vary, but consistency matters more than precision at the start.
Budgeting also plays a role. NIL earnings can feel like fast money, especially if this is your first exposure to larger income. A clear plan can help you cover needs, enjoy some of what you earn, and still reserve funds for taxes and future goals.
Early earnings can shape your financial future
NIL income can create opportunities many students don’t have. Instead of treating all earnings as spending money, consider how part of it could support longer-term goals.
Depending on your situation, options may include:
- Roth IRAs
- Solo 401(k)s
- Other tax-advantaged savings vehicles
Starting early can make a meaningful difference over time. The goal isn’t just to earn during college — it’s to put those earnings to work.
NIL can also be a career-building tool
The value of NIL isn’t just financial. It can also open doors to alumni, business leaders, sponsors, and mentors. A deal or collaboration today could turn into a relationship lasting well beyond your athletic career.
That’s why NIL is worth viewing as part of a broader plan. What kind of brand are you building? What connections are you making? What happens if your path changes due to injury, transfers, or other factors?
Frequently asked questions about NIL income
Not necessarily.
Unlike professional athletes, college athletes are typically paid for NIL activities — not for playing their sport. That means taxes are generally tied to where those activities take place.
You’ll usually file in:
- Your resident state
- The state where your school is located
- Any state where you perform specific NIL activities (such as appearances or filming)
Possibly, yes.
Since taxes usually aren’t withheld from NIL income, you may need to make quarterly estimated payments. These help you avoid penalties and spread the tax burden throughout the year instead of facing a large bill at filing time.
A common starting point is to:
- Set aside a percentage of each payment
- Adjust as your income becomes more predictable
Safe harbor rules are meant to help you avoid penalties for underpaying taxes during the year.
In general, you can avoid penalties if you pay:
- A set percentage of last year’s total tax, or
- A large portion of your current year’s expected tax
This can be helpful if your income increases quickly, such as moving from little or no income to significant NIL earnings.
Start simple, but stay consistent. Options include:
- A spreadsheet
- An expense tracking app
- Accounting software
Using a separate bank account or card for NIL-related activity can make tracking easier and help avoid sorting through mixed expenses later.
How CLA can help with NIL deals
NIL deals can create real opportunity, along with responsibilities many student-athletes are handling for the first time: tax reporting, state filings, entity questions, and planning decisions.
CLA works with current and retired athletes on tax compliance, financial planning, and business structuring, helping them address immediate questions and think through what comes next.
Contact us
Turn your NIL earnings into a stronger financial start. Complete the form below to connect with CLA.