NIL (Name, Image & Likeness) Tax Preparation Checklist: Filing Taxes for College Athletes

College athletes have been able to pay their college expenses through scholarships, grants, financial aid, and even part-time jobs. However, prior to July 1, 2021 under NCAA rules, college athletes were not allowed to engage in NIL (Name, Image, and Likeness) activities without impacting their NCAA eligibility.

On July 1, 2021, NCAA passed an interim NIL policy allowing student-athletes and prospective student athletes to engage in and make money from NIL (Name, Image, and Likeness) activities.

If you are a college athlete or prospective college athlete, you may be wondering, “What kind of NIL activities can I now engage in?, “What kind of income can I earn?”, “What does the NIL policy mean to my finances and taxes?

TurboTax has you covered and can guide you through reporting your income earned through NIL activities and maximizing your deductions, or you can have a TurboTax Live tax expert do your taxes for you.

But first, you need to ensure you have all the right information and necessary items to complete your taxes. Click through to determine what NIL and income documents you need based on your unique tax situation:

Although TurboTax will help you accurately report your NIL income and maximize your tax deductions and credits, here is a FAQ to answer your questions about tax implications of NIL activities and how to save money.

What kind of NIL activities can I engage in and what income can I earn through NIL activities?

College athletes are making money through NIL activities in a variety of ways such as:

• Guest appearances at clubs, schools, and autograph signings
• Exhibitions
• Sports Events
• Sponsorships
• Endorsements
• Content creation/Influencer
• NFTs
• Gifts/giveaways

How will I be paid for my NIL activities and how will I be taxed?

If you earned income from NIL activities, you were probably paid like an independent contractor, and you are considered self-employed. If you earned $600 or more, your income will be reported on Form 1099-NEC. If you were paid through a third-party platform like Paypal, you will receive a Form 1099-K if you had more than 200 transactions and made more than $20,000 in 2023.

Under the American Rescue Plan, changes were made to Form 1099-K reporting requirements for third-party payment networks like Venmo and PayPal that process credit/debit card payments or electronic payment transfers. The change was to take effect with transactions starting tax year 2022  and lowered the reporting threshold by third party payment processors to over $600. 

On December 23, 2022, the IRS announced an initial delay and on November 21, 2023, the IRS announced another delay in reporting thresholds for third-party settlement organizations (TPSOs). As a result of this delay, TPSOs were not required to report tax year 2023 transactions on a Form 1099-K at the lower amount of over $600. This means that for tax year 2023 (the taxes you file in 2024), the existing 1099-K reporting threshold of the aggregate of more than $20,000 in payments and over 200 transactions remained in effect. The IRS is currently planning for a threshold of $5,000 for tax year 2024 (the taxes you file in 2025) as part of the phase in to implement the lower over $600 threshold enacted under the American Rescue Plan. 

Even if you don’t meet the income requirements to receive a Form 1099-NEC or Form 1099-K, you should still report all your income.

I received crypto as payment for my NIL activities. How is it taxed?

Crypto received as payment for your NIL activities will be taxed as self-employment income just like when you get paid for self-employed services. The income will be reported on a 1099-NEC just like when you are self-employed or on a 1099-K if paid through a third party provider.

When you sell the crypto that you received, you will be taxed on any gains from the sale. Your gain or loss will be calculated by subtracting the fair market value of the crypto at the time of receipt from the sales price.

I received free products for my NIL activities. Do I have to claim free products or gifts I receive on my taxes?

Yes, you should include the fair market value of the free products or gifts in income. If you receive a gift or free products valued at $600 or more, you should receive a Form 1099-MISC.

When do I need to file a tax return for my NIL activities?

If you have net income (gross income minus your expenses related to your NIL activities) of $400 or more, you need to file your taxes and pay self-employment taxes. Self-employment taxes are 15.3% of your net income. If you think you will owe $1,000 or more, you also should pay quarterly estimated taxes. Therefore, it is important to take as many tax deductions as you are eligible for so you can lower your taxes. Because you are considered self-employed, you can maximize your tax savings by taking deductions directly related to your NIL activities.

How can I save money on my taxes through NIL activities?

There are so many tax deductions you can take. Any expense directly related to your NIL activities may be deducted. Make sure you have your receipts for deductible expenses like:

• Airfare
• Hotel stays
• Car expenses
• Web site fees
• Marketing
• Agency fees

Don’t worry about knowing all the deductions you can take. TurboTax Self-Employed searches for industry-specific deductions that you may not even be aware of.

What other tax benefits am I eligible for as a college-athlete?

• Education Tax Credits – As long as your parents don’t claim you as a dependent, you may also be able to lower your taxes by claiming the American Opportunity Tax Credit up to $2,500.
• Student Loan Interest Deduction – If you or your parents are paying student loans on your behalf, you may be able to deduct up to $2,500 in student loan interest.

Should my parents claim me as a dependent or should I make sure they don’t claim me?

It all depends on several factors that will allow them to claim you:

• If you are now making money and providing over half of your own support, they will not be able to claim you as a dependent.
• If your parents are not eligible for tax benefits like education credits due to income, then they should not claim you so you can get the tax savings.

Does my NIL income impact my FAFSA (Federal Application for Federal Student Aid)?

Since NIL income is taxable and will need to be reported on your FAFSA application, it could impact needs-based federal aid.

Don’t worry about knowing the NIL income rules. TurboTax has you covered and will ask you simple questions about you and give you the deductions and credits you’re eligible for. If you have questions, you can connect to a TurboTax Live Assisted Self-Employed expert to get help along the way, or you can meet with a TurboTax Full Service expert who can prepare, sign and file your taxes, so you can be 100% confident your taxes are done right. Start TurboTax Live Full Service today, in English or Spanish, and get your taxes done and off your mind.