Video: Tax Tips for NIL Athletes
College athletes can make money from their name, image and likeness, or NIL. Learn from TurboTax Tax Expert and CPA Lisa Greene-Lewis how this can affect taxes and finances of both parents and athletes.
Video Transcript:
Tracy Byrnes: A lot of talk these days about college kids making money as athletes. And can they benefit from that? NIL athletes actually do get some tax breaks. Lisa Greene-Lewis, TurboTax expert and CPA, is here with us right now. I guess -- so the first question is, what the heck is an NIL athlete?
Lisa Greene-Lewis: So the NCAA passed that athletes can now use their name, image, and likeness and make money. So that's what that is. And one thing that they need to know is: now that they're making money, they are considered self-employed because they're probably paid on a 1099 of some sort, like, a 1099-NEC or 1099-K.
Tracy Byrnes: So in the previous video, we talked about potentially having the kids file separately versus their parents as opposed to being on their parent's tax return. This is probably a surefire reason the kid has to file separately in order to get the benefits, because what you're saying basically is they need to file a Schedule C then, as a self-employed person.
Lisa Greene-Lewis: Right. Exactly. And a lot of these kids are making a lot of money. So they would have to file their own tax return.
Tracy Byrnes: So what are the benefits? What are the things they could take advantage of then as an NIL athlete?
Lisa Greene-Lewis: Yeah, a lot of them are just -- they're new to this. This is probably -- well, tax year 2022 was probably the first full year where this was in place and they were filing taxes. And a lot of them just don't realize that the things that they're doing to make money using their name, image, and likeness can -- anything directly related can be deductible, just like a self-employed person that has a business.
So their travel to an event where they're getting paid for it, anything related to their travel, their mileage, the percentage of their car usage, if they have a website that they're using to market themself or website support. A lot of them are influencers now, so video equipment and things like that are directly related, they can deduct that and really lower their taxes.
Tracy Byrnes: That's a great point. They have to change the mindset a little. They are now self-employed, so whatever income they make can be offset by whatever expenses they incur. So that's, I think, probably news to a bunch of these athletes.
Lisa Greene-Lewis: Yes, it is. It's a first for a lot of things for them, the first time they're making a lot of money, first time they're having to file taxes. Another thing they should think about is being self-employed, they have to think about if they have to pay estimated taxes because if you expect to owe $1,000 or more, then you need to pay estimated taxes.
Tracy Byrnes: Yeah, so this is probably a good time for them to start tooling around on TurboTax to figure this out. I'm guessing TurboTax can help walk them through this.
Lisa Greene-Lewis: Yes. We have TurboTax TaxCaster which helps you estimate and figure out where you stand in the year. And then at tax time, we have our TurboTax self-employed that really helps you identify those deductions and expenses that are directly related to your business. And then if you want, you can fully hand your taxes over to our TurboTax live experts, and you don't have to worry about it.
Tracy Byrnes: Yeah, it definitely starts to get confusing when you're self-employed. So if you know an NIL athlete, if you are an NIL athlete, pay attention to this stuff because you deserve to get the credit for all your hard work. Lisa Greene-Lewis, TurboTax expert and CPA, thank you for all of that.
Lisa Greene-Lewis: Thank you for having me.
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