As NIL earnings continue to shape the landscape of college athletics, administrators play a vital role in ensuring student-athletes are prepared for tax season. Teamworks Influencer, in partnership with TurboTax, recently co-hosted a webinar featuring a panel of experts:

Katharina Reekmans – Enrolled Agent & TurboTax Expert
Abby Jacobs – Senior Manager, Product Success, Teamworks
Danielle Davison – Assistant Athletic Director for NIL, University of Michigan
Mercedes Sapp – Coordinator of Student-Athlete Enhancement & NIL Engagement, University of South Florida

Together, they shared key insights on tax obligations, deductions, and best practices for compliance and the best ways to support your student-athletes. Here’s what you need to know.

Why NIL Taxes Matter for Student-Athletes

00:00:00 – 00:00:50
NIL earnings — whether from sponsorships, social media, merchandise sales, or appearances — are considered taxable income. This means student-athletes must report their earnings to the IRS and potentially pay self-employment tax. Understanding these obligations early can help avoid financial surprises down the road.

NIL Tax Basics: What Athletes Need to Know

00:02:01 – 00:15:30

• 1099 vs. W-2 Forms: Most student-athletes will receive 1099-NEC or 1099-K forms, because they are considered independent contractors. This differs from traditional employment (W-2), which includes tax withholdings.
• Self-Employment Tax: Student-athletes who earned over $400 from NIL activities must pay self-employment tax.
• State Tax Considerations: Taxes may vary by state, to understand what your state requirements are, visit here. 

Tracking and Reporting NIL Income

00:15:31 – 00:30:00
Keeping accurate records is crucial for tax filing and future reference. Student-athletes should maintain these documents throughout the year and keep them handy until filing their taxes. Additionally, it’s important to store them securely even after filing, as they may be needed for potential audits, amendments, or future financial planning. Share these tips with your student-athletes:

• Securely store all copies of 1099 forms received from sponsors and brands.
• Keep a log of non-monetary benefits (free products or trips), which may be considered taxable income.
• Keep a record of NIL-related expenses for deductions.

Maximizing Deductions and Reducing Tax Burden

00:30:01 – 00:45:00
Deductions can be confusing, and many times student-athletes don’t know what they can and cannot deduct. Kat from TurboTax shared that certain NIL-related expenses can be deducted to lower taxable income. However, she noted that only expenses directly related to an NIL deal— meaning they can only be used for that specific NIL activity — are eligible for deductions. For example, if an athlete gets a haircut for a photoshoot, that expense is not deductible because even though it was for an NIL photoshoot, it will also be ‘used’ elsewhere, so it’s not deductible. However, costs like travel for an NIL event or hiring a photographer specifically for NIL-related content can qualify. Here are a few examples of deductible expenses:

• Training costs and facility fees
• Travel and lodging for NIL-related events
• Marketing expenses (social media promotion, website costs)
• Professional services (legal or financial advisors)

Avoiding Common Tax Mistakes

00:45:01 – 01:00:00
Student-athletes often make the following mistakes due to lack of experience with taxes, reliance on parents for past filings, or simply not knowing what to look out for – share the following key tips with your student-athletes:

• Failing to set aside money for taxes: Our partners at TurboTax recommend saving 30% of NIL income for tax obligations.
• Misreporting or underreporting income: The IRS can track NIL earnings, so accurate reporting is essential.
• Ignoring state tax rules: Multi-state earnings may require filing in multiple states. To understand what your state requirements are, visit here

Mercedes Sapp & Danielle Davison: How Athletic Administrators Can Help

01:00:01 – End
Mercedes and Danielle work daily with their student-athletes to help educate them on NIL taxes and help prepare them for tax season. Here are a few top tips:

• Offer NIL tax education sessions – get creative and make them fun!
• Provide resources on tax filing and professional assistance.
• Encourage the use of financial tracking tools like the Influencer app, which helps athletes manage their earnings and expenses. The app allows them to export their transaction history and even send exports directly to a third party.

Final Takeaways

Tax season can be daunting for student-athletes navigating NIL earnings, but with proper education and preparation, they can successfully manage their financial responsibilities. Administrators should play an active role in ensuring athletes understand their obligations, track their income, and take advantage of available deductions. Whether it’s following in Mercedes’ footsteps by creating student-athlete tax symposiums each semester or adopting Danielle’s approach of using engaging games to capture students’ attention, there are many ways to make tax education both effective and accessible.

For more insights and expert guidance, watch the full webinar replay or explore additional NIL tax resources from TurboTax and Teamworks.