{"id":60143,"date":"2022-02-25T16:34:49","date_gmt":"2022-02-25T22:34:49","guid":{"rendered":"https:\/\/www.hrblock.com\/tax-center\/?p=60143"},"modified":"2024-08-05T14:05:55","modified_gmt":"2024-08-05T19:05:55","slug":"nil-student-athletes","status":"publish","type":"post","link":"https:\/\/www.hrblock.com\/tax-center\/income\/nil-student-athletes\/","title":{"rendered":"Name, image, likeness and the tax implications of paying college athletes"},"content":{"rendered":"\n

Custom merch, autograph signings, appearances, and social media partnerships. These are just some of the ways brands are paying college athletes after recent changes under NCAA rules have permitted paid sponsorships for college athlete name, image, and likeness (NIL). With the NIL policy introduced in 2021, student athletes have new compensation opportunities made possible by their name and sport.<\/p>\n\n\n

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And, while there\u2019s a lot of excitement around new NIL deals, there\u2019s more to this monetary game changer for college athletes. Specifically, taxes.<\/p>\n\n\n\n

Of course, it\u2019s tempting to brush taxes off for later, but there are several things student athletes getting paid based on the new NIL sponsorships \u2014 and their parents \u2014 will want to be aware of now. For example, income from the use of a college athlete\u2019s name, image, and likeness may bump some student athletes off of their parents\u2019 tax return. Additionally, student athletes may need to set aside money to cover tax bills due throughout the year.<\/p>\n\n\n\n

So, if you’re an NCAA student athletes with sponsorship income, what are the must-know tax impacts? The tax experts at H&R Block have outlined five key ways NIL compensation may affect your tax filing.<\/p>\n\n\n\n

Sound challenging? Don\u2019t sweat it\u2014we\u2019re here to help you create a winning tax strategy.<\/p>\n\n\n\n

Need expert tax filing help for your student filer now?<\/strong> Review H&R Block tax filing options<\/a>. Also, see how H&R Block is giving female athletes a fair shot<\/a> by committing $1 million in sponsorship support.<\/p>\n\n\n\n

5 ways NIL income can impact taxes<\/h2>\n\n\n\n

Paying college athletes for their name, image, and likeness comes with an array of tax complications. Let\u2019s dive into the details.<\/p>\n\n\n\n

1. Dependency status<\/strong><\/h3>\n\n\n\n

Parents often ask if they can claim their college students as a dependent<\/a>. While there are several criteria to consider, an important one in the NIL context is financial support. If parents provide more than half of their child\u2019s financial support, they may be able to claim them. Support includes paying for expenses such as food, clothing, lodging, medical\/dental care, education. <\/p>\n\n\n

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With that in mind, think about how much money you\u2019re receiving from your sponsorships. If your NIL income outweighs the support from your parents, then you likely no longer qualify as their dependent.<\/p>\n\n\n\n

So, what do you need to know about filing on your own? First, your filing status<\/a> will determine the threshold of income at which you\u2019ll be required to file taxes (more on that in the next section). Then, other facets of your financial life will determine what tax credits or deductions you\u2019re eligible to claim, which can in turn help to lower your tax bill.<\/p>\n\n\n\n

Keep in mind, any education credits will shift from your parents return to your own return if you are no longer a dependent.<\/p>\n\n\n\n

But there\u2019s much more than just your annual tax return to think about. Read on.<\/p>\n\n\n\n

2. Self-employment status and tax obligations<\/strong><\/h3>\n\n\n\n

It may come as a surprise, but your student athlete sponsorship income is viewed as self-employment (or independent contractor) income, which means taxes will be different than if you worked as a W-2 employee<\/a>.<\/p>\n\n\n

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