What Counts as Taxable NIL Income? A Guide for College Athletes and Parents | Jimmy Bisharat
By: Jimmy Bisharat
NIL income is generally taxable, including cash, products, and services received in exchange for the use of your name, image, or likeness. That applies even if you never receive a 1099 or W-2. For college athletes and parents, the challenge is recognizing everything that belongs in that total.
A sponsorship check is easy to count. Free clothing, gift cards, or haircuts in exchange for social media posts can feel more like perks. But those arrangements can potentially create a tax obligation, too. When you’re figuring out what you earned and how much you can spend, looking only at your bank account can leave out part of the picture.
What counts as taxable NIL income?
Taxable NIL income can include brand deals, paid social media content, autograph signings, promotional appearances, and royalties. The IRS also lists school revenue sharing payments and House settlement damages in its NIL income guidance. Merchandise and services received as compensation belong in the conversation as well.
The question to ask is simple: Did you receive something of value in exchange for your NIL or promotional work? If the answer is yes, document it and share it with your CPA.
Do free products and services count as income?
They generally do when they are part of an exchange. If a clothing company provides merchandise in return for posts, or a barber offers free haircuts in exchange for promoting the shop, you are receiving compensation. The IRS generally requires the fair market value of goods and services received through barter to be included in income.
Imagine you receive $15,000 in cash sponsorship payments and $3,000 worth of products and services for promotional work. Your gross income from those arrangements would generally be $18,000 before allowable deductions, even though only $15,000 reached your bank account.
Noncash compensation can create a tax bill without providing the cash to pay it. That’s something to understand before accepting a deal, especially if much of the compensation comes in products or services.
Do you have to report NIL income without a 1099?
Yes. A missing tax form does not make NIL compensation tax-free. Athletes must report their NIL income even if the payer does not issue a form.
That makes your own records important. Keep a running log of each deal, what you received, when you received it, and what you agreed to provide. Save contracts and supporting documentation in one place. If you’re a parent helping your athlete, ask about products and services alongside cash payments. Those details can be easy to forget by tax season.
When do you pay taxes on NIL income?
Depending on your situation, payments may be required during the year. Federal taxes generally must be paid as income is earned through withholding or estimated payments. Waiting until you file your return can potentially result in underpayment penalties if you were required to pay earlier.
Setting aside money is only part of the process. Your CPA can help determine how much you need to reserve and when payments are due. As new deals arrive, revisit those estimates so your plan reflects what you’re actually earning.
Before a big decision, get your advisor and CPA on the same page.
Before buying a car, putting money toward a home, or committing to another major expense, make sure your financial advisor and CPA understand your full situation. That includes your income, contract payment schedule, tax obligations, spending needs, and goals.
Your CPA can evaluate the tax treatment and payment requirements. Your advisor can use that information to help determine what you can comfortably spend, save, and invest. When they coordinate, you have a clearer picture of how today’s decision fits into your future.
If you or your athlete is earning NIL income, let’s build that plan before the next big financial decision. I can work alongside your CPA to understand what’s coming in, account for what needs to go out, and put the remaining money toward the goals that matter to you.
Sources:
Gerber Kawasaki Wealth & Investment Management is an investment advisor located in California. Gerber Kawasaki Wealth & Investment Management is registered with the Securities and Exchange Commission (SEC). Registration of an investment advisor does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Gerber Kawasaki only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Gerber Kawasaki Wealth & Investment Management 's current written disclosure brochure filed with the SEC which discusses, among other things, Gerber Kawasaki Wealth & Investment Management's business practices, services and fees, is available through the SEC's website at: http://www.adviserinfo.sec.gov .
Jimmy Bisharat is a Financial Advisor of Santa Monica, California-based Gerber Kawasaki Inc., an SEC-registered investment firm with approximately ~$4.78B billion in assets under management and assets under advisement as of 06/30/26. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This material is for general information only and is not intended to provide specific tax or investment advice. Consult your tax professional regarding your individual situation.To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss. Readers shouldn't buy any investment without doing their research to determine if the investments are suitable for their situation. “All investments involve risk and one should consult a financial advisor before making any investments. Past performance is not indicative of future results."
