The world of college athletics has transformed with the arrival of Name, Image, Likeness (NIL) deals. While profiting from your fame is exciting, it also introduces new tax responsibilities. Don't worry, we've got you covered!
Understanding NIL Income as Taxable Income
Consider everything you receive through NIL activities taxable income – money, goods, services, even free products for endorsements or NFT sales. Basically, anything of value obtained through NIL needs to be reported.
Employee vs. Independent Contractor
This distinction matters for tax purposes. As an employee, you'd complete a W-4 form. But as an independent contractor, you'd require a W-9 form.
Tax Filing Requirements and Potential Steps
The amount you earn and your dependency status determine your filing obligations. You might need to file a federal tax return if your NIL income surpasses $400 or the standard deduction (especially if your parents claim you as a dependent). Here are some crucial steps:
*Track your NIL income and expenses meticulously.
*Make estimated tax payments quarterly to avoid penalties.
*File relevant tax forms (Schedule C or Schedule E with your Form 1040) depending on your situation.
Stay Informed, Stay Compliant
Understanding your tax obligations and keeping good records is key to a smooth tax season with NIL deals. Check out all our blogs, https://lnkd.in/gbWCdTdW to learn more about navigating the tax world.
Remember, Lakeesha V. Browne, CPA is here to help you. Reach out today for a free consultation and discover how she can support you in understanding your rights and responsibilities, and help you navigate your tax responsibilities. Stay informed, stay compliant, and focus on winning – both on and off the field!
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