This is not tax advice — it's a plain-language summary of federal rules sourced directly from the IRS, current as of September 2026. Every athlete and family's situation is different, and state tax rules (which this article doesn't cover) vary. Talk to a CPA or tax preparer before filing, especially the first year you have NIL income.
The IRS has a page written specifically for this: Name, image and likeness income. Its core statement is the one thing every NIL earner needs to internalize: "If you are a student-athlete and you receive any monetary or financial gain from the use of your name, image, or likeness, that gain is NIL income," and student-athletes are "generally considered self-employed independent contractors for tax purposes." That single classification — self-employed, not an employee — is what drives everything below.
You'll owe self-employment tax, not just income tax
Because NIL income is self-employment income, it's subject to self-employment (SE) tax on top of ordinary income tax. The SE tax rate is 15.3% — 12.4% for Social Security and 2.9% for Medicare — IRS: Self-employment tax. The Social Security portion applies up to a wage base cap ($176,100 for 2025, $184,500 for 2026 — Topic no. 751); the Medicare portion has no cap.
You owe this whether or not anyone sends you a tax form. The threshold is net self-employment earnings of $400 or more in a year — Instructions for Schedule SE. A handful of small, cash NIL payments that never trigger a 1099 can still add up to a filing requirement.
What tax forms to expect
A business that pays you $600 or more in a year for NIL work is required to send you a Form 1099-NEC (payments made in 2025); that threshold rises to $2,000 starting with payments made in 2026, under a law change already in effect — 2025 Instructions for Forms 1099-MISC and 1099-NEC, 2026 revision. If you're paid through a third-party platform or payment app rather than directly, you may instead get a Form 1099-K — but only if that platform pays you more than $20,000 and over 200 transactions in a year, a threshold Congress restored in 2025 after several years of a much lower proposed limit — IRS: Form 1099-K threshold reverts to $20,000. Either way: not getting a 1099 doesn't mean the income isn't taxable. Report it regardless.
Report NIL income and related business expenses on Schedule C (Profit or Loss from Business), filed with your Form 1040. Royalty-type NIL income can instead belong on Schedule E — the IRS's NIL page covers that distinction directly.
Quarterly estimated payments
Employees have tax withheld from every paycheck automatically. Self-employed people don't have anyone withholding for them, so the IRS expects estimated payments made throughout the year instead of one lump sum in April. If you expect to owe $1,000 or more for the year, you're generally required to pay estimated tax using Form 1040-ES — IRS: Estimated taxes, About Form 1040-ES. Payments are due four times a year, on the 15th day of the 4th, 6th, and 9th months of the tax year, and the 15th day of the following January (shifted to the next business day when that date falls on a weekend or holiday) — IRS: when to pay estimated tax.
Skipping this and paying everything at once in April can trigger an underpayment penalty on top of the tax itself, even if the return is filed and paid on time. If your NIL income is unpredictable — some months with deals, some without — a tax preparer can help you estimate a reasonable quarterly amount rather than guessing.
What you can deduct
Ordinary and necessary business expenses are deductible on Schedule C — costs that are common in the kind of work you do and genuinely useful to doing it — Instructions for Schedule C. The IRS's NIL page specifically calls out keeping receipts, purchase orders, travel records, and mileage logs to support these deductions. Don't assume a specific category (equipment, coaching, travel to an appearance) is automatically deductible just because it's NIL-related — the ordinary-and-necessary standard is a judgment call your tax preparer should make with you, not a fixed list.
How long to keep records
Keep documentation of your NIL income and expenses for at least three years from when you file — the general period during which the IRS can audit a return. That extends to six years if you underreported income by more than 25% of what's on the return, and indefinitely if a return was never filed or was fraudulent — IRS: How long should I keep records?. In practice: keep every 1099, every invoice, every receipt for a deal-related expense, and a simple log of what you were paid and when.
If the athlete is a minor
NIL income earned by a minor belongs to the minor for tax purposes, even in states where a parent legally controls how the money is used: "Amounts a child earns by performing services are included in the child's gross income and not the gross income of the parent" — IRS Publication 501, "Child's earnings". But the same page makes parents' practical responsibility clear: if the child doesn't pay the tax owed on that income, the parent is liable for it, and if a dependent child needs to file but can't (because of age or any other reason), a parent or guardian must file the return for them, signing as "parent for minor child."
For 2025, a dependent generally has to file if their earned income was more than $15,750 (or if the child's situation meets one of Publication 501's other gross-income tests) — check the current-year thresholds directly since they're adjusted annually. A minor's own Social Security number is what's used for self-employment tax purposes; there's no requirement to get a separate EIN just because the earner is a minor.
One common point of confusion worth clearing up: the "kiddie tax" (Form 8615), which taxes some of a child's income at the parent's higher rate, applies only to a child's *unearned* income — interest, dividends, investment gains. NIL income is earned/self-employment income and isn't subject to it — Topic no. 553, kiddie tax.
The short version
Every dollar of NIL income is taxable, whether or not it comes with a 1099. Expect to pay both income tax and 15.3% self-employment tax. Set aside money for taxes as you're paid rather than waiting until spring, consider quarterly estimated payments if you expect to owe $1,000 or more, keep every receipt and 1099, and get a real tax preparer involved the first year money starts coming in — the cost of one is small next to the cost of guessing wrong on a Schedule C.
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