NIL Deals Can Create Real Tax Responsibilities 

Name, image, and likeness opportunities have opened new doors for student-athletes. From brand endorsements and social media promotions to camps, appearances, and merchandise agreements, NIL income can be an exciting way for athletes to benefit from their hard work and visibility. 

But with that income comes a responsibility many young athletes and families may not expect: taxes. 

NIL Income Is Often Business Income 

In many cases, NIL payments are not treated like a traditional paycheck. Instead, athletes may be paid as independent contractors and receive a Form 1099. That means taxes are generally not withheld when the payment is made. 

For a student-athlete who has never filed a tax return or managed business income, this can be a surprise. NIL activity may require the athlete to report income, track related expenses, and understand whether self-employment tax applies. Even non-cash benefits, such as products, apparel, equipment, or gift cards, may have tax value that needs to be reported. 

That shift can make a student-athlete look less like a casual earner and more like a small business owner in the eyes of the tax system. 

Payment Structure Matters 

Not every NIL arrangement works the same way. Some payments may come from outside brands, collectives, or other third parties. Others may be connected to school-related revenue-sharing arrangements, which continue to evolve. 

The form an athlete receives can make a meaningful difference. A Form 1099 generally means the athlete may need to plan for taxes independently. A Form W-2 generally means withholding is built into the payment process. Families should avoid assuming that all NIL income will be treated the same, especially as college athletics continues to change. 

Cross-Border NIL Creates Another Layer of Tax Considerations 

For Canadian student-athletes, NIL income can create tax considerations in both countries.  The fact that an athlete is a Canadian citizen does not, by itself, determine how the income will be taxed.  Residency, where the athlete performs services, the type of payment, and athlete’s U.S. immigration and tax status can all affect the analysis.   

An athlete may have U.S. filing obligations while also needing to consider Canadian reporting requirements and potential foreign tax credits.  Cross-border athletes should therefore consider tax and immigration requirements before signing an NIL agreement. 

Planning Should Start Before the First Payment 

The best time to talk about NIL taxes is before the agreement is signed and before the money is spent. Athletes and families should consider how payments will be reported, whether estimated taxes may be needed, how expenses will be tracked, and whether income in more than one state could create added filing questions. 

Good recordkeeping can make a major difference. Contracts, payment details, receipts, travel records, and documentation of non-cash compensation can all help create a clearer picture at tax time. 

NIL income can be a valuable opportunity, but it should be handled with the same care as any other source of business income. Student-athletes, parents, and advisors who start the conversation early can help reduce surprises and build better financial habits from the beginning. 

Brady Martz professionals can help families and student-athletes understand the tax questions that may come with NIL activity and determine when a more detailed conversation may be appropriate.