NIL & Your Family’s Money
Your athlete signed their first NIL deal. Nobody handed you the tax bill that comes with it. Here’s what every parent needs to know — and the habits that keep a five-figure surprise from landing next April.
By Alex Cowley•Founder, TaxleticGuest Column
Full disclosure: I built Taxletic, the app I mention later in this piece. I’m writing this for ParentsOfStudentAthletes.com because the tax problem below is real, most families never see it coming — and you can start protecting your athlete today, whether or not you ever download anything I made.
The text comes in on a Tuesday. A local dealership, a supplement brand, a clothing store down the road wants your son or daughter to post, show up, sign a few autographs. Four figures. Maybe five. You celebrate — and you should. Your kid earned it with years of 5 a.m. workouts.
Then, months later, comes the part nobody mentioned: a form called a 1099, a bill from the IRS, and a number that makes the whole family go quiet. I’ve watched this happen to good families over and over. It’s the reason I built the app I’ll get to later. But first, here’s the education every NIL parent deserves — plain and practical.
Your athlete is now a small business
The moment your athlete gets paid for their Name, Image, and Likeness, the IRS stops seeing a student and starts seeing an independent contractor — essentially a one-person business. That changes three things most families don’t expect:
- No taxes are withheld. A normal job takes taxes out of every paycheck. NIL money hits the account in full. Every dollar that looks like theirs isn’t — a chunk already belongs to the government.
- There’s an extra tax on top. Beyond regular income tax, self-employed people pay self-employment tax of 15.3% for Social Security and Medicare. At a normal job the employer covers half of that. On NIL income, your athlete pays all of it.
- Deals over $2,000 trigger a 1099. (The threshold jumped from $600 to $2,000 in 2026.) That form goes to your athlete and to the IRS. And here’s the part families miss: even a $1,500 deal that never generates a 1099 is still taxable income — the form is a paper trail, not the trigger.
And it isn’t a once-a-year event. The IRS expects self-employed people to pay estimated taxes four times a year — quarterly. Skip them and the IRS charges interest on the underpayment until it’s caught up. Two exceptions worth knowing: quarterly payments aren’t required if the total tax owed for the year will be under $1,000, and there’s no penalty at all if your athlete owed $0 in tax the year before — true for a lot of first-year NIL earners.
The money arrives in the spring, gets spent by summer, and the bill lands the following April — when it’s already gone. That gap is where families get hurt.
The math nobody shows you
Specifics beat scare tactics, so let’s show the math. Here’s an illustrative NIL year: a single athlete, $20,000 in deals, living in a no-income-tax state like Texas. Read it like a box score — money in at the top, what the taxes take, and the final take-home at the bottom.
NIL Tax Box ScoreIllustrative · 2026
NIL income — the win$20,000
Self-employment tax (15.3%)−$2,826
Federal income tax (est.)−$249
Final take-home$16,925
Roughly 15% went to taxes — and none of it was withheld. Move that same athlete to a high-tax state like California, and state tax can pull out another four figures, pushing closer to a full quarter of the check out the door.
This is the number Taxletic shows the moment a deal is logged — before your athlete spends a dollar of it.
The fix is a habit, not a panic
Here’s the good news: this is completely manageable when you get ahead of it. Below is what I’d tell any parent to do this week — no app required.
Parent Playbook
What to do this week
- Open a separate savings account for taxes. The day NIL money arrives, move 25–30% into it and pretend it was never there.
- Save every contract and 1099 in one folder — physical or digital. Your future tax preparer will thank you.
- Put the four quarterly dates on the calendar: April 15, June 15, September 15, and January 15.
- Track the expenses. Equipment, travel to appearances, part of the phone bill, editing software — legitimate business costs lower the tax bill. Keep receipts.
- Talk to a CPA before the money, not after. One conversation early beats a cleanup later.
- Check the ripple effects. NIL income can affect financial aid, dependency status, and some benefits. It can also mean owing tax in a state your athlete doesn’t live in — an away game or appearance can create a filing requirement there too. Ask your school’s compliance office.
- Have the money talk. The most valuable habit your athlete builds this year may simply be setting money aside before spending it.
Where Taxletic fits
I built Taxletic because I wanted those habits built into something an athlete would actually open on their phone. Here’s what it does, in plain terms:
- See take-home instantly. Log a deal and Taxletic calculates federal, self-employment, and all-50-state taxes on the spot — so your athlete knows exactly how much to set aside before spending a dime.
- The Tax Room. A quarterly deadline tracker that counts down to those four dates and warns you before a penalty can happen.
- A Parent Dashboard. You get a linked view of your athlete’s deals, taxes, and deadlines — informed, without hovering.
- A Tax Pack. At filing time, export a clean, organized packet for your CPA (or for filing yourself).
- A Learning Center — and a rating that makes it stick. The app teaches the basics and turns good financial habits into a trading-card-style score (we call it the TRS™). An athlete who’ll ignore a spreadsheet will absolutely try to level up their rating.
Deals Made. Taxes Paid.
Taxletic is on iOS today — built for NIL athletes and the parents in their corner.Download on theApp Store
Beyond the app: where to learn more
You don’t have to take my word for any of it. A few trustworthy places to go deeper:
01IRS.gov — Estimated Taxes (Form 1040-ES) & Schedule SE. The primary source on quarterly payments and self-employment tax.
02IRS Free File & VITA (Volunteer Income Tax Assistance). Free filing tools and free in-person help for families who qualify.
03A local CPA or enrolled agent. The IRS preparer directory and the National Association of Tax Professionals can help you find one near you.
04Your school’s NIL / compliance office. State laws and school rules differ — they’re your on-the-ground resource.
Your athlete did the hard part. They earned it. The job now — yours and mine — is making sure they keep as much of it as the law allows. Open the savings account this week. The rest follows.
Alex Cowley is the founder of Taxletic. This article is educational and is not tax, legal, or financial advice. Every family’s situation is different — consult a qualified tax professional. Dollar figures shown are illustrative 2026 estimates and will vary by income, state, filing status, and deductions.
