If you are a college athlete – United States citizen or from another country – engaged in NIL (Name, Image, and Likeness) activities, you will need to file taxes in the United States, excluding tuition, training, competition, and NIL-related income.
Whether you’re paying income tax early or filing for NIL payments for the first time, we’ve got the information you need – plus we answer questions about how these rules apply to international student-athletes. Check out our International Student-Athlete Guide to NIL Taxes!
International students and NIL fees
You do not need to be a US citizen to take advantage of the NIL income rules. International students may also receive NIL income depending on their visa type and state or university guidelines.
Do international students pay NIL fees?
Yes. Generally, if you are from another country and receive payments from NIL activities in the US, you will have to pay taxes on the income received. Nonresidents must report all income—including NIL payments—to the Internal Revenue Service (IRS) regardless of immigration status. (Hint: You can determine your official status here.) You’ll usually pay state and federal taxes. It is important to make sure you are eligible for the type of work based on your visa type.
How do non-residents file taxes?
All nonresidents who are required to file an income tax return must use Form 1040-NR, US Nonresident Alien Income Tax Return.
You will need a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) to complete this form correctly and with all the required information. This is a tax processing number issued by the IRS to those who need a US Taxpayer Identification Number (like an SSN) but are not eligible to receive one.
Make sure your address, passport, income documents and forms are not available when filing your non-resident tax return.
Are there any deductions or refunds?
Regardless of whether the income is earned while in the United States, if you are a nonresident temporarily living in the U.S., you will still need to file what is known as Form 8843. Form 8843 is an informational return and should not be confused. Income tax declaration. You must complete Form 8843 if you were in the U.S. during the previous tax year, are a nonresident alien, and are in the U.S. under an F-1, J-1, F-2, or J-2 visa status.
You may still be able to claim deductions to reduce your effectively connected taxable income. Nonresident aliens may deduct certain deductions if they earn income effectively connected with a U.S. trade or business.
You can also get a tax refund when you’re done filing your taxes. This is money that the state or federal government has already taken out of your paycheck and is now returning to you because it was more than you owed.
Summary at NIL
Technically everyone has a name, an image and a likeness – but for student-athletes, this is your chance to cash in – on you and being you, you.
What are NIL rules and who makes them?
NIL rules apply to a college athlete’s right and ability to be paid for certain activities or appearances. These activities may include:
- Appearing in clubs, schools or other places.
- Appearance at sporting events.
- Autograph signatures.
- Likes.
- Content creation.
- Gifts and presents.
The National Collegiate Athletic Association (NCAA) is responsible for the latest change, called the Interim NIL Policy, which went into effect in mid-2021. Previously, you couldn’t monetize NIL activities — but thanks to the new policy, you can receive NIL payments without jeopardizing your NCAA eligibility.
Individual states and athletic programs may have their own NIL payment guidelines. NCAA policies do not override what your university, program or state has already implemented.
Where do the payments come from?
Although states and the NCAA set NIL rules, these entities are not responsible for offering or administering your payments. This money comes from someone who invites you to an event, hosts your content, or otherwise uses your name and likeness.
How is NIL income taxed?
In most cases, NIL income is taxable. This means you must report it on your tax return and remit a portion of it to the federal and state governments.
For tax year 2022, NIL payments of $600 or more per year were expected to be reported on Form 1099-NEC. If payments were made through a third-party payment organization (TPSO) — think Venmo, PayPal or CashApp — you had more than 200 transactions and made more than $20,000, you should have received a Form 1099-K. The IRS has delayed the new Form 1099-K reporting threshold for the 2022 tax year to allow for a transition period. However, for tax year 2023 (taxes you would normally make in 2024) and after, NIL payments that exceed $600 per year made through a TPSO will be reported on Form 1099-K.
These forms tell you how much money you’ve earned and from which sources. Even if you do not receive these documents, you may still need NIL income for tax purposes. Once you have this information in hand, you can start filing your taxes to find out what (if anything) you owe.
Self-employment tax
When you receive NIL payments, you are usually considered an “independent contractor.” This puts you in the same boat as freelance writers, delivery drivers, virtual assistants, and others who aren’t technically employed by a particular company. Once you work for yourself and strike a deal with an organization or business, you are self-employed.
It’s important to know that self-employment tax is slightly different from the tax you might pay on traditional income as an employee. When you work for yourself, no one takes money from your salary for you; Instead, you are fully responsible for paying Social Security and Medicare taxes, which ends up with a tax rate of 15.3%. so additionally State and Federal Taxes.
Other forms of payment
Not all NIL payments are cash. For example, you may receive cryptocurrency that is still taxed as self-employment income and reported on Form 1099-NEC at the fair market value of the cryptocurrency at the time you received it. When you sell this cryptocurrency, you also pay taxes on the profit from the sale. This is called “Capital Gains Tax”. If the nonresident alien is physically present in the United States for 183 or more days during the tax year, the tax rate on U.S.-source capital gains is 30%.
In other cases, you may be paid with gifts or free products. This is also considered as NIL income; You simply include the fair market value of each item on your tax return if it was not reported by the company on the 1099.
Other tax tips
Whether you’re an international student or have lived in the United States all your life, the truth is that taxes can be a little intimidating—especially if it’s your first time. Here are some tips to help you navigate your tax situation beyond NIL payments:
Your parents’ bills
If you are an international student-athlete and your parents have US tax filing requirements, there is a chance that your parents may still claim your dependent status. This depends on several factors, including what percentage of your support is included. For example, if your NIL payments exceed the amount provided by your parents, you may no longer have dependent status.
To learn more about these opportunities and responsibilities, see our parent’s guide to NIL.
Deductions and Credits
Deductions and credits can reduce the amount of income that is considered taxable or reduce your tax payment overall.
Here are some of the most important business deductions that student-athletes can deduct for NIL transactions:
- Travel expenses, including airfare, car rental, and more.
- Marketing or website costs.
- Agency fee.
Scholarships and grants
According to the IRS, many scholarships and grants are tax-free. This means that you will not have to report this money as income.
tax assistance
There are many ways to get tax help, especially if this is your first application. For example, the IRS has tons of resources about tax forms, responsibilities, rates, filing statuses, and more.
If you’re a US resident, you can use TurboTax to do your taxes correctly—including automatic checks for all the deductions, credits, and expenses you’re allowed to claim. Non-residents can work with our friends at Sprintax.
Have NIL questions? We have the answers
The new NIL policy allows student-athletes like you to earn money doing what you were probably already doing. Just remember that on your way to fame and success, you’ll have to slow down from time to time and meet NIL tax requirements.
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