Post-Grad Tax Guide for NIL Earners

Your tax return evolves with your career and financial situation — so what does tax filing look like for student-athletes earning (or not earning) NIL after graduation? Let’s look at a few scenarios to help you know what to expect once you graduate.

Earning NIL after college

Profiting from your name, image, and likeness (NIL) doesn’t have to end once you graduate — even if your professional career is outside the sporting world.

Scenario 1: The NIL side gig

You don’t have to say goodbye to earning NIL compensation if you decide to leave athletics behind after graduation. If it’s an option for you, NIL money could make a good side hustle.

Back in college, you probably got used to disclosing the details of your NIL contracts to your school and the NCAA for approval.

For instance, maybe you’re working a typical 9-5 job after graduation, but a local business reaches out wanting you to help promote their product. You agree, and suddenly you’re back to making NIL compensation.

In the example above, any money you earned from promoting that product would be considered self-employment income, just like it would be for a college student. You’d report the NIL income and any expenses on your taxes the same way, using Schedule C.

Some reminders for earning NIL income after graduation:

  • Read your contracts carefully: It probably goes without saying, but always do your research and choose your partners with care when signing NIL contracts.
  • Determine how you want to get paid: How you collect your NIL compensation matters! Make sure you know the potential perks and drawbacks of each method offered to you, whether it be cash, payment apps like Venmo, merchandise, or other means.
  • Remember to pay quarterly estimated taxes: Don’t forget to estimate and pay your income and self-employment taxes each quarter if you expect to owe more than $1,000 in federal taxes for the year.
  • Keep meticulous records: Be sure to track your NIL income and expenses to streamline your tax filing and ensure you don’t miss out on any tax deductions. If you haven’t already, consider maintaining a separate business account to make this process even easier.

Scenario 2: The pro athlete

Going pro? If you’re pursuing a career in a popular sport and expect to make a lot of money after college, taxes may be complicated — but chances are, you won’t be the one dealing with them.

If you’ve managed to break into the competitive world of pro sports, an agent should be doing most of the heavy lifting where your taxes are concerned.

As a pro athlete, you will likely want to have some personal liability protection. Your agent can help you form a legal business entity such as a limited liability company (LLC) or corporation depending on your needs. In addition, they should also be able to help you find someone to manage your personal finances and taxes, negotiate marketing contracts, and curate your personal brand as your career progresses.

Scenario 3: The career switch

Upon graduation, you may find yourself pivoting from the athletic world to the corporate world. Not only is this a lifestyle change, but it’ll likely come with tax changes as well.

The good news? Your taxes may actually get easier.

Unless you plan on freelancing or starting your own business, you’ll typically find yourself as a W-2 employee at your first job out of college. If so, you won’t need to worry about things like making quarterly estimated tax payments or keeping meticulous business records anymore. Three cheers for no more guesstimating every quarter!

You won’t need to file Schedule C with your tax return if you aren’t earning any NIL income (unless you are earning other self-employment income). Instead, you’ll simply receive a W-2 from your employer detailing how much tax was withheld from your paychecks during the year. You’ll use this information when filing your federal income tax return to determine if you owe any additional tax or if you’re owed a tax refund.

Main takeaways

Earning NIL after college can be a good way to make some extra money on the side. Just be sure to read your contracts thoroughly, know how to report your self-employment income, and keep good financial records.

Whatever you decide to pursue after graduation, TaxActâ is here to help you file with confidence when you’re ready!

This article is for informational purposes only and not legal or financial advice.
All TaxAct offers, products and services are subject to applicable terms and conditions.
Sophie Tremblay

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