Receiving a 1099 for Your NIL Contract: What to Expect

For athletes and families, the first NIL check can feel like the hard part is over.

Then tax season arrives.

Most student-athletes will receive most, if not all, of their NIL income from a school, collective or brand partner, and those payments are usually reported as nonemployee income with no taxes withheld.

Many student-athletes receiving money from school revenue-sharing arrangements, collectives, appearances, sponsorships or brand deals may receive a Form 1099. That form does not automatically mean something is wrong. But it does mean families need to understand what kind of income was paid, how it may be reported and whether taxes were withheld before the athlete received the money.

What a 1099 Means

A 1099 tied to Name, Image and Likeness income is an information return. In plain English, it tells the IRS that a person, business or organization paid the athlete.

In many athlete-payment situations, the athlete is treated more like an independent contractor than a traditional employee. That means the payer may report the income, but taxes may not be withheld from the payment.

That is where families can get surprised. The athlete may receive the full payment up front, but still owe taxes later.

Two Common Forms Athletes May See

Form 1099-NEC is generally used for nonemployee compensation. For athletes, that may include active work such as brand promotions, appearances, autograph signings, sponsored social media posts or other services tied to a deal.

This type of income is often treated like business income. It may need to be reported on Schedule C, and it may be subject to self-employment tax if net earnings are high enough.

Form 1099-MISC may apply to certain other types of income, including royalties, prizes, awards or other payments depending on how the payer classifies the income. The IRS publishes combined instructions for Forms 1099-MISC and 1099-NEC, but families should not assume every athlete payment is handled the same way.

That distinction matters. Active service income, royalty-style income, school revenue-sharing payments and non-cash benefits may be treated differently depending on the facts.

Free Does Not Always Mean Tax-Free

Families should also pay attention to non-cash benefits.

Gear, merchandise, gift cards, travel, apparel, technology or other perks may still count as taxable income based on fair market value. Even if no cash changes hands, the value of what the athlete receives can still matter.

The same is true for smaller payments. No form does not always mean no tax. Even if a payer does not issue a 1099, income may still need to be reported.

Records Matter

Athletes should keep track of contracts, payment amounts, non-cash benefits and expenses connected to earning the income.

That can include ordinary business expenses tied to appearances, marketing, travel, agent fees or brand management. Families do not need to become tax experts, but they do need to stay organized before tax season.

A Note for International Athletes

International athletes may face additional complications, especially around visa rules, U.S.-source income and tax reporting. Those families should seek specialized guidance before accepting payments or signing agreements.

The bigger the opportunity, the more important the paperwork becomes.

This section is educational and should not be read as financial, legal or tax advice. Families should consult qualified professionals for advice specific to their situation.

For questions, contact Ed Castellanos at The Seiler Group of Raymond James at ed.castellanos@raymondjames.com.