If you’re a college athlete — a United States citizen or from another country — engaging in NIL (Name, Image, and Likeness) activities, you will need to file taxes in the U.S. That’s in addition to studying, practicing, competing, and earning NIL-related income.
Whether you’ve paid income taxes before or are filing for the first time because of NIL payments, we have the information you need – plus, we answer questions about how these rules apply to international student-athletes. Check out our international student-athlete’s guide to NIL taxes!
International Students and NIL Taxes
You don’t have to be a U.S. citizen to benefit from NIL income rules. International students may also be eligible for NIL income depending on their visa type and state or university guidelines.
Do International Students Pay NIL Taxes?
Yes. Generally, if you’re from another country and getting payments from NIL activities in the U.S., you’ll have to pay taxes on income earned. Non-residents 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 generally pay state and federal taxes. It’s important to make sure that you are authorized for the type of work depending on your visa type.
How Do Non-Residents File Taxes?
All non-residents who are required to file an income tax return must use Form 1040-NR, U.S. Non-resident Alient Income Tax Return.
To fill out this form properly and with all the necessary information, you’ll need a Social Security number (SSN) or individual taxpayer identification number (ITIN). This is a tax processing number issued by the IRS for those who need a U.S. taxpayer identification number (like an SSN) but aren’t eligible to receive one.
Make sure you have your address, passport, income documents, and forms within reach when filing your non-resident tax return.
Are There Deductions or Refunds Available?
Regardless of if you have earned income during your time in the U.S., if you are a nonresident temporarily residing in the U.S., you will still need to file what’s known as Form 8843. Form 8843 is an informational return and is not to be confused with an income tax return. You should file Form 8843 if you were present in the US during the previous tax year, are a nonresident alien, and are in the US under an F-1, J-1, F-2, or J-2 visa status.
You might still be able to claim deductions to help reduce your effectively connected taxable income. Nonresident aliens can deduct certain itemized deductions if they receive income effectively connected with their U.S. trade or business.
You may also get a tax refund when you finish filing your taxes. This is money the state or federal government already took out of your payment and is now returning to you because it was more than what you owed.
The Rundown on NIL
Everyone technically has a name, image, and likeness — but for student-athletes, this is your chance to make money off of – YOU and what makes you, you.
What Are NIL Rules and Who Makes Them?
NIL rules refer to a college athlete’s right and ability to be paid for certain activities or appearances. These activities can include:
- Appearances at clubs, schools, or other locations.
- Appearances at sporting events.
- Autograph signings.
- Content creation.
- Gifts and giveaways.
The National Collegiate Athletic Association (NCAA) is responsible for a recent change, called the interim NIL policy, which went into effect in mid-2021. Before this, 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. The NCAA policy doesn’t override anything your university, program or state has already put in place.
Where Do the Payments Come From?
Although states and the NCAA make NIL rules, these entities aren’t responsible for offering or managing your payments. That money comes from whoever invited you to an event, hosted your content, or otherwise used your name and likeness.
How Is NIL Income Taxed?
Most of the time, NIL income is taxable. That means you’ll need to report it on a tax return and give some of it to federal and state governments.
For tax year 2022, NIL payments of $600 or more per year were likely reported on Form 1099-NEC. If payments were made through a third-party settlement organization (TPSO) — think Venmo, PayPal, or CashApp — you had more than 200 transactions, AND made over $20,000, you should have received a Form 1099-K. The IRS delayed the new threshold reporting requirements for a Form 1099-K for tax year 2022 to serve as a transition period. However for tax year 2023 (the taxes you would normally do in 2024) and beyond, NIL payments exceeding $600 per year made through a TPSO will be reported on Form 1099-K.
These forms tell you how much money you made and from which sources. Even if you don’t get these documents, you may still need to report NIL income for tax purposes. Once you have that info in hand, you can start filing your taxes to find out what you owe (if anything).
When you get NIL payments, you’re usually considered an “independent contractor.” That puts you in the same boat as freelance writers, delivery drivers, virtual assistants, and others who aren’t technically employed by a particular company. Since you work for yourself and made a deal with an organization or business, you’re self-employed.
It’s important to know that Self-Employment Tax is a little different from the tax you might have paid on traditional earnings as an employee. When you work for yourself, nobody takes money out of your paycheck for you; instead, you’re fully responsible for paying Social Security and Medicare taxes, culminating in a tax rate of 15.3%. That’s in addition to state and federal taxes.
Other Forms of Payment
Not all NIL payments are cold hard cash. For example, you may receive cryptocurrency instead, which is still taxed as self-employment income and reported on a Form 1099-NEC at the fair market value of the crypto at the time of receipt.. When you sell that crypto, you’ll also pay taxes on any gains from the sale. This is called “capital gains tax.” If a nonresident alien is physically present in the U.S. for 183 days or more 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 NIL income; you’ll just include the fair market value of each product on your tax return if it wasn’t reported by the company on a 1099.
Other Tax Tips
Whether you’re an international student or have lived in the U.S. all your life, the truth is that taxes can be a little intimidating — especially if this is your first time filing. Here are some tips to help you navigate your tax situation beyond NIL payments:
Your Parents’ Taxes
If you’re an international student-athlete and your parents have U.S. tax filing requirements, there’s a chance your parents could still claim you as a dependent. That depends on a few factors, including what percentage of your support they cover. For example, if your NIL payments exceed the amount your parents provide, you might not be eligible for dependent status anymore.
To learn more about these opportunities and responsibilities, check out our parent’s guide to NIL.
Deductions and Credits
Deductions and credits can reduce the amount of income that is considered taxable or lower your tax payment overall.
Here are some of the most relevant business deductions student-athletes might be able to deduct in connection with their NIL deals:
- Travel expenses, including airfare, rental cars, and more.
- Marketing or website costs.
- Agency fees.
Scholarships and Grants
According to the IRS, many scholarships and grants are tax-free. That means you don’t have to report that money as income.
There are plenty of ways to get tax help, especially if this is your first time filing. For example, the IRS has plenty of resources about tax forms, responsibilities, rates, filing statuses, and more.
If you’re a U.S. resident, you can use TurboTax to get your taxes done right — including an automatic check for all the deductions, credits, and expenses you may be eligible to claim. Non-residents can work with our friends at Sprintax.
Got NIL Questions? We’ve Got Answers
The new NIL policy allows student-athletes like you to make money from things you were probably already doing. Just remember that, on your path to fame and success, you’ll occasionally have to slow down and brush up on NIL tax requirements.
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