Tax Season Playbook: What Every Athlete and Family Needs to Know
Tax Season Playbook: What Every Athlete and Family Needs to Know
For many families, tax season brings more anxiety than game day. Add in NIL income, scholarships, and summer jobs, and even seasoned parents can feel lost. But here’s the good news: with the right approach, student-athletes and their families can turn tax time from a headache into a financial advantage. Here’s your expert playbook for taxes in the NIL era—whether your athlete’s earning a little or a lot.
1. Understand What’s Taxable—And What’s Not
- NIL Income: Every dollar (cash, products, even some gift cards) from Name, Image, and Likeness deals is considered taxable income by the IRS.
- Scholarships: Money used for tuition, fees, and required supplies is usually tax-free. Anything used for room, board, or living expenses? Taxable.
- Summer Jobs and Side Hustles: All are reportable to the IRS—even if you don’t get a W-2 (for jobs) or 1099 (for gigs).
Action Step: Keep a “tax file” all year—save every contract, receipt, payment record, and email about NIL deals, scholarships, or jobs.
2. Don’t Wait Until April—Get Organized Early
The families who win at tax time don’t scramble at the last minute.
- Create a system: Use a spreadsheet, app, or even a notebook to track all athlete income and expenses throughout the year.
- Open a separate bank account: For NIL or athlete income. Makes tracking—and filing—much easier.
- Scan and save: Digital copies of every contract, invoice, or sponsorship agreement.
3. Plan for Withholding—Or You’ll Owe Big
Unlike a traditional job, most NIL deals and side hustles don’t take out taxes automatically.
- Rule of thumb: Set aside 25–30% of all NIL and side income for taxes—don’t spend it!
- Quarterly payments: If your athlete earns significant money, you may need to pay estimated taxes four times a year.
- Parents: Encourage your athlete to treat this like “forced savings.” It’s better to get a refund than a penalty.
4. What Counts as a Deduction?
Many families miss valuable deductions, especially if their athlete is hustling on NIL or running camps/clinics.
- Possible deductions:
- Equipment and gear (if required for NIL or a side business)
- Marketing costs (website, logo design, social media tools)
- Travel expenses (when directly related to NIL gigs, appearances, or business—not team travel)
- Professional services (accountants, legal advice for NIL contracts)
- Home office (if your athlete has a dedicated space for NIL work)
Caution: Keep detailed records and always check with a tax professional.
5. Beware the Scholarship & Grant Trap
Not all scholarship or grant money is tax-free:
- If it covers room, board, or is paid directly to your athlete (not the school), some or all may be taxable.
- Some athletic or academic awards given as cash, not applied to tuition, are taxable too.
6. The Parent-Athlete Tax Team
- Parents: Guide your athlete through paperwork, explain forms, and help set up savings for tax bills.
- Athletes: Take ownership. Learn what forms you’re getting (W-2, 1099-NEC, 1098-T for tuition) and keep them organized.
7. Filing: DIY or Pro Help?
- For simple returns, many families use online tools like TurboTax, H&R Block, or FreeFile.
- If NIL deals get big, or you run a business, work with a pro—preferably one who understands student-athletes and NIL.
- Start early—February and March are the best times to get help.
8. Avoiding Pitfalls
- Don’t ignore small NIL or side hustle income. The IRS is getting smarter about tracking online and mobile payments.
- Never throw away forms, even if they look unimportant.
- Don’t rely on parents to do it all. This is a life skill for every athlete.
9. What If You Miss Something or Owe?
- If you forget to report income, file an amendment as soon as you realize it.
- Can’t pay your whole tax bill? The IRS offers payment plans—don’t ignore the problem.
10. Plan Ahead for Next Year
- Review what worked (or didn’t) this year.
- Adjust your savings, record-keeping, and deduction tracking.
- Plan a family “tax day” for next season—make it a learning experience, not a scramble.
Final Thoughts
Taxes don’t have to be scary. The families and athletes who take a team approach—organize early, ask questions, and treat taxes as part of their money game—save more, stress less, and build lifelong financial skills. In the NIL era, being tax-smart isn’t just for accountants. It’s for every athlete and family who wants to win.
