If you’re a college athlete looking to save money on NIL taxes, you’re in the right place. Here are a few key steps to help you maximize your NIL income and avoid paying more in taxes than you need to.
1. Consult With an Accountant
Everyone’s situation is different. NIL taxes are not one-size-fits-all.
We strongly recommend working with a qualified accountant who understands NIL income and can help you navigate your specific circumstances.
2. Form an LLC
Consider setting up an LLC so you can operate as a business. This allows you to:
- Open a business bank account
- Get a business credit card
- Separate personal and business finances
3. Open a Business Bank Account & Credit Card
After receiving your EIN, we recommend opening a dedicated business bank account and credit card for all NIL income. All payments should flow through these accounts rather than your personal finances.
Maintaining this separation is critical. It strengthens legal protection, ensures accurate records, and makes tax reporting far more efficient. Treating your NIL income as business income positions you for long-term financial success.
4. Have the School (or Brand) Pay Your LLC Directly
Whenever possible, ask the school or brand to pay your LLC directly, rather than making payments to your personal bank account. Direct LLC payments keep NIL income properly categorized, simplify accounting, and ensure your ability to claim business deductions.
5. Your Business Expenses & Maximizing Write-Offs
Use your business account and credit card for all legitimate business expenses. We recommend reviewing expense types with your accountant to ensure they qualify as deductible. Examples of deductible expenses include:
- Training
- Supplements
- Medical devices
- Fitness classes
Keep receipts and statements organized and provide them to your accountant at year-end. Proper documentation ensures you maximize NIL write-offs and reduce your taxable income.
6. Understand How This Lowers Your Taxable Income
Your taxable income is calculated after legitimate business deductions. Properly tracking expenses can result in:
- Lower taxable income
- Reduced tax liability
- More money in your pocket
Failure to track and deduct correctly could cost you paying far more taxes than necessary.
NIL Taxes FAQs
No, but it can provide structure, organization, and potential tax advantages.
No. Only legitimate business-related expenses qualify. Always confirm with your accountant.
No. Tax planning should happen before and during the year — not after.
Yes. Any income you earn through NIL deals must be reported to the IRS.
Even small NIL earnings can have tax implications. A qualified accountant can help you structure your finances correctly, track deductions, and avoid overpaying taxes.
