Taxes can be complicated, but luckily athletes have easy options when filing taxes when making money with their name, image and likeness.
If you’ve earned NIL money, you’ll have to file taxes since NIL income must be reported on tax returns. This includes any monetary earnings you make (cash) and/or non-cash benefits you recieve (products, services, etc.).
Below are a few questions athletes might have when filing for your taxes in late winter/early spring:
What do Do Before Filing Your Taxes
I didn’t make that much NIL money. How much do I have to make to be required to file taxes?
If you make $400 or more in NIL cash or non-cash benefits, you need to file taxes on your earnings.
Do I need to do anything before I file my taxes?
Yes! Before you get paid, make sure you fill out a W-9 Form and a W-4 Form through the company you’re partnering working with.
Forms to Complete
What is a W-9 and W-4 Form?
A W-9 Form is what you fill out to the person or business your partnering with, as they are required to file your info on an IRS report. As an NIL earner, you are considered an independent contractor or freelance worker for any work provided that gets you paid more than $400 in NIL activities.
A W-4 Form is the document you complete to determine how much money should be withheld from your paycheck for federal taxes. By doing this step properly, you’ll avoid overpaying your taxes or owing a large balance at tax time.
Filing Your Taxes
How do I actually file my taxes?
There are a few ways you can file for your taxes:
- Pay a tax professional. Working with an certified tax professional is great because it saves you time and helps you avoid errors. Long-term, a tax professional can also help you develop a strategy if you feel like you’re paying too many, or too little taxes. Working with a professional is one of the more expensive options.
- Use a tax filing software. Using a tax software is also a great option when filing your taxes. These programs are typically easy to use, cost-effective, and provide you with your refund faster. However, a tax software may not be able to handle a complex tax situation, and it isn’t error-proof.
- File taxes yourself. If you don’t have many income sources (like only one or two NIL partnerships), filing for your taxes directly with the IRS could be a great option. Filing taxes on your own saves money and can help keep your information private since you aren’t working with another party. Filing for yourself will save you the most money but could result in error if they’re not perfect.
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