Student‑athletes think NIL is only taxable when CASH MONEY hits their account. Nope!
If you receive anything of value in exchange for a service (e.g., a post, appearance, promotion, etc.) That’s taxable income.
Shoes? Taxable.
Gear? Taxable.
Hotel stays? Taxable.
A “gifted” car? VERY taxable.
What to be aware of:
Fair Market Value – The IRS taxes the value of goods/services you received in the year you received them. Not what you think it’s worth.
State and Local Tax – yes you have to pay the federal government. You also have to pay the state (some states not included) and even your local government. Athletes must file state tax returns based on residency and where the money was earned.
1099s – even if you didn’t receive a 1099 doesn’t mean you shouldn’t report it. Company’s aren’t going to issue a 1099 on payments under $600.
Recordkeeping – because NIL income is taxable you should be meticulously keeping records and receipts of all NIL related activities. If you don’t track it, you’ll be guessing at tax time.
We love free stuff but remember the government wants its cut. Understand free ain’t free! This is something you really should seek out a tax advisor or CPA on.
