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A Year-Long Guide to NIL Tax Planning

Now that we’ve put that scary April 15th Tax Day deadline behind us, we’ve got about 11 months before we need to worry about taxes again, right?

While that may be true for many of us who work for a company and have the benefit of tax withholding from every paycheck, the same can’t be said for student-athletes making NIL money. For any athlete collecting NIL checks – no matter how big or small they are – tax planning needs to be a year-round process. 

Let’s say a freshman point guard at a prolific school just paid out the taxes on her NIL income from 2023, which included the second half of her senior year of high school and the start of her freshman year. Her season got off to a slow start and her NIL income from 2023 reflected that – all in, she owed only $750 in self employment, state, and federal income taxes for the year. 

After leading her team to a conference championship and the Final Four this spring, she signed three new NIL deals that will see her bring in more than $100,000 in cash and comped products, travel, and experiences in 2024. Of course more money in her pocket means she’ll owe more in taxes next April, but the story doesn’t end there.

With her windfall of new NIL income, she has a few very important things to stay on top of post-tax day – the first of which is making the quarterly estimated tax payments required of any NIL athlete (or self-employed person) who expects to pay over $1k in taxes for the year. 

Student-athletes like our hypothetical point guard are often left playing catch up every year when tax season rolls around, but it shouldn’t be that way. The complexities of the tax system and NIL income require constant engagement from both athletes and their support systems – that means coaches, administrators, and parents equally bought in to helping the athlete succeed financially.

Here at Scout, we provide athletes with everything they need to keep tabs on their finances year-round so there are no surprises during tax season. With that in mind, we’re excited to share this guide to year-round NIL tax planning. Here’s what you need to know:  

1. Who Owes Quarterly Expected Tax Payments?

Any self-employed person who expects to owe over $1,000 in federal taxes at the end of the year should instead make quarterly “expected tax” payments to the IRS. This is especially important for athletes to consider, as the interest and penalties can be severe for anyone who owes quarterly taxes but instead waits to pay until filing a tax return in April. Managing an athlete’s quarterly tax payments requires attention throughout the year – that June 17th deadline will sneak up on us fast! 

The IRS website is a valuable source of information on who needs to make expected tax payments, when the payments are due, and how to make the payments.    

2. Understanding Taxation on the Market Value of Products & Trips

A large percentage of today’s NIL deals involve the athlete receiving free products, services, trips, or experiences in exchange for brand promotion. Far too often we hear from athletes with deals like this who enter tax season entirely unaware of the tax implications of the free product or service they’re getting. While products and services valued over $600 often come with a 1099 form reporting their value, it’s the smaller values that often add up and can be a major headache come tax time. 

Athletes who track and account for the values of any in-kind products or services they receive throughout the year are going to be much better prepared for the arrival of tax season. 

3. Managing Tax Deductible Expenses

Every year at tax time, we see far too many student-athletes pay more than they need to in taxes. Any athlete paying taxes on their full NIL earnings for the year without deducting associated expenses – things like hotels, airfare, and gas money spent on appearances for example – is likely overpaying. Of course, these expenses need to be reasonable and not unnecessarily extravagant. That said, even things like a cell phone or lighting kit for creating NIL-related content can be deducted. 

Athletes need to keep track of these expenses as they come. This is the only way to avoid either forgetting to deduct them entirely, or the long and arduous process of looking back at credit card statements to find deductions.  

4. Preparing for April 15, 2025

Everything we’ve outlined above should be done in an effort to make the next tax season as efficient and painless as possible. All it takes is a bit of foresight, consistent attention, and the right team working to set each individual athlete up for success. That’s where Scout comes in. Our platform empowers student-athletes and the people around them to successfully navigate the challenges that come with NIL-related taxes. 

We understand how hard it can be for busy student-athletes to manage quarterly tax payments, deductible expenses, gifting, and everything else thrown at them throughout the year – that’s why we built a platform that manages their tax planning for them. Protecting the financial interests of college athletes is what we do best, and we’re proud to provide an innovative service that empowers these athletes to fully benefit from NIL opportunities. 

About Scout

Scout is a financial coaching platform that provides student-athletes with the knowledge and tools to facilitate personal financial success — from investing and saving to budgeting and tax-planning. We work with individual athletes, college teams and athletic programs to empower and protect students in the changing NIL landscape. Black-led, with a deep commitment to diversity, equity and inclusion, Scout is intentional about welcoming, educating, and guiding those from under resourced and marginalized communities.

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