Athletes new to tax filing may need extra guidance
Tax rules apply to college athletes the same way they apply to professional athletes (or anyone, for that matter). NCAA athletes receiving payments for NIL may have federal, state, and potentially local income tax filing requirements — depending on the amount of income and where the athlete lives or goes to school. As a college athlete, if you are not experienced with tax matters in general, you may not be aware of your obligations.
Most schools are beginning to put programs in place to educate their student athletes about NIL — to the extent they are allowed. In October 2022, the NCAA’s Division I board of directors issued a new set of clarifications to better distinguish NIL from pay-for-play. The NCAA limits the types of services and education schools can provide regarding legal and financial matters.
Schools are not allowed to provide services, other than education, to support NIL activities (such as tax preparation and contract review) unless the same benefit is generally available to all the institution’s students. Many schools advise student-athletes that their NIL income is taxable and urge them to contact a tax professional for guidance.
School and booster involvement in student NIL opportunities is limited
The NCAA Division I board of directors recently published new guidance related to institutional involvement in a student-athlete’s NIL activities. The clarification was issued to better distinguish NIL earnings from pay-for-play earnings and help schools avoid violation of NCAA rules. Schools must be aware of the rules and what institutional involvement is permissible and impermissible.
Income tax considerations for NCAA athletes
NIL creates an opportunity for athletes to learn the ropes about personal finance, budgeting, and taxation at a young age. Consider some basic ground rules and potential issues:
How we can help
Smart tax planning starts with knowing when to ask for guidance. One Source can help you take advantage of tax opportunities and stay in compliance, at any stage of your career. Our tax professionals work closely with you to assess your tax situation and help you navigate the complexities of federal, state, and local tax issues that come along with NIL income. Contact us today for more information.