Tips For NIL Athletes Receiving Endorsement Income

Key Things NIL Athletes Should Consider About Their Income

1. Taxes and Record-Keeping

NIL income is taxable — just like a regular job or freelance work.

Athletes often receive Form 1099s (not W-2s), meaning no taxes are withheld.

You may owe federal, state, and sometimes local income taxes.

Keep track of all payments, expenses, and receipts (e.g., equipment, travel for appearances, marketing costs).

2. Estimated Tax Payments

Because taxes aren’t withheld from NIL checks, athletes may need to make quarterly estimated tax payments to avoid penalties.

Setting aside 25–35% of each payment in a separate savings account for taxes is a good practice.

3. State-by-State Rules

Taxes and NIL regulations differ by state — especially if athletes earn money in a different state than their school or home residence. Some states require additional filings or have special NIL disclosure rules.

4. Impact on Financial Aid & Scholarships

NIL earnings could affect need-based financial aid packages or certain scholarships.

Athletes should notify their school’s compliance office and financial aid department about their NIL income.

5. Business Formation & Liability Protection

For athletes with significant or recurring deals, forming an LLC or similar entity can help separate personal and business finances, potentially save on taxes, provide liability protection and a more professional image for brands. 

6. Contracts and Compliance

Understand each contract’s deliverables, deadlines, exclusivity, and renewal terms.

Make sure the deal complies with NCAA/conference/school rules and state NIL laws.

Avoid agreements that conflict with school sponsorships (e.g., competing apparel brands).

7. Brand Protection and Long-Term Planning

NIL income isn’t guaranteed every season; it’s smart to budget and save.

Build a personal brand that supports future opportunities — whether in pro sports, media, or another career.

Consider working with a trusted financial adviser or accountant who understands athletes’ needs.

Mag Mile Sport helps athletes stay compliant, save for taxes, negotiate strong contracts, and make smart decisions that protect their eligibility and their future income. Contact us for more info.