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Started By
Message
Anyone know the TAX of NIL
Posted on 2/3/22 at 8:22 pm
Posted on 2/3/22 at 8:22 pm
Clearly, players are NOT employees.. Are they Contractors? Independent Business people... entripounours? How is the income reported.. from both sides? I assume in the OLDEN days, players did not claim income, and donors hid payments.. NOW .. how is it coded? IS there A 1099? The business can certainly write it off... Man, this is going to be an accounting story in 1.5 years.
12
Top RepliesPosted on 2/3/22 at 10:22 pm to DeafVallyBatnR
If no entity is set up, the 1099 income would be reported on a Schedule C of their individual income tax return, form 1040.
On an assumed NIL payment of $100,000 subject to a 10% agency/agent fee filing single with no dependents:
The resulting realized $90,000 in income would be reduced by $6,358 as the deductible portion of Self-Employment taxes and $12,500 in the standard deduction and $14,218 in QBI deduction.
Leaving $56,874 in taxable income. With federal income tax of $8,261 and self-employment tax of $12,716 for a total tax bill of $20,977 to uncle sam. Please note that state income and self-employment taxes are not included in these figures. Using a conservative 5% that is an approx. $4,250 state tax bill.
To recap
$100,000 NIL payment
(10,000) agent fee
(20,977) federal income and self employment taxes
(4,250) state income taxes
_______
$64,773 after tax income
ETA: May not qualify for the QBI deduction due to the nature of the "business" and federal income taxes would be due on the $14,218. Used a quick online calculator, not actual tax prep software for the above illustration.
On an assumed NIL payment of $100,000 subject to a 10% agency/agent fee filing single with no dependents:
The resulting realized $90,000 in income would be reduced by $6,358 as the deductible portion of Self-Employment taxes and $12,500 in the standard deduction and $14,218 in QBI deduction.
Leaving $56,874 in taxable income. With federal income tax of $8,261 and self-employment tax of $12,716 for a total tax bill of $20,977 to uncle sam. Please note that state income and self-employment taxes are not included in these figures. Using a conservative 5% that is an approx. $4,250 state tax bill.
To recap
$100,000 NIL payment
(10,000) agent fee
(20,977) federal income and self employment taxes
(4,250) state income taxes
_______
$64,773 after tax income
ETA: May not qualify for the QBI deduction due to the nature of the "business" and federal income taxes would be due on the $14,218. Used a quick online calculator, not actual tax prep software for the above illustration.
This post was edited on 2/3/22 at 10:30 pm
All Replies (43)
Posted on 2/3/22 at 8:26 pm to Scatback1
If they are smart, they will set up NIL payments as “gifts” from enough donors to keep the individual donor $$$ amount under $10k year and its tax free.
Player gets 100k year as $5k gifts from 20 boosters. Boom, tax free bitches!
Player gets 100k year as $5k gifts from 20 boosters. Boom, tax free bitches!
Posted on 2/3/22 at 8:30 pm to Meauxjeaux
Holy shite it’s $16000 per year now! My info is so old. Crank those NILs up to max!
Posted on 2/3/22 at 8:33 pm to Scatback1
Gonna be taxable income. If $400-500K paid in a lump sum the first year, they will owe Uncle Sam well over $100k. If paid out over 4 years, they might owe roughly 20-25 % per year. Just seat of the pants estimates. Let's get a over/under bet going on how many of these rocket scientists don't file at all.
Posted on 2/3/22 at 9:30 pm to Meauxjeaux
Nil aren’t gifts!
Posted on 2/3/22 at 9:34 pm to Meauxjeaux
quote:
If they are smart, they will set up NIL payments as “gifts” from enough donors to keep the individual donor $$$ amount under $10k year and its tax free. Player gets 100k year as $5k gifts from 20 boosters. Boom, tax free bitches!
Sorry; that’s not how it works. Wouldn’t that be nice though? I’d ask my employer quit paying me and, instead, to give me monthly gifts.
Posted on 2/3/22 at 9:34 pm to Scatback1
It's a 1099 just like anyone that gets money from a corporation for use of something.
The only problem is it's not a huge amount of money and some of these families have never had enough money to pay taxes. So it is a problem for some.
The only problem is it's not a huge amount of money and some of these families have never had enough money to pay taxes. So it is a problem for some.
Posted on 2/3/22 at 9:40 pm to Scatback1
It is considered earned income. Due to the tax bracket on some of these amounts it will be between 33-38% tax rate. They will pay IRS
Posted on 2/3/22 at 9:50 pm to Stropdaddy
Gonna be a rough day in college station every April 15th
Posted on 2/3/22 at 9:52 pm to Stropdaddy
The irs will get a good chunk since most will file single without any write offs since the school covers everything. The school needs to prepare the kids for this and also have someone that can assist with taxes.
They are going to get a dose of reality asap and they will figure out that the government will make that 100k much less. There will be many throughout the country that will spend all of it and not have enough to cover the taxes unfortunately.
They are going to get a dose of reality asap and they will figure out that the government will make that 100k much less. There will be many throughout the country that will spend all of it and not have enough to cover the taxes unfortunately.
Posted on 2/3/22 at 10:05 pm to crossfire
I feel like that’ll be the case. 1099s don’t typically have income tax withheld so most of these kids and families are going to be blindsided.
LINK
NIL - you are being paid for use of your name, image, or likeness… these aren’t gifts and you’ll have to contribute something in the way of name image or likeness toward whomever contracted you. Appearances, social media postings, autographs, photo shoots, etc. There will be contracts and there will be breaches of contract that we’ll see. There are going to be lots of kids hurting from not understanding the depth of what they’re getting into. Those under the table deals of old never saw Uncle Sam - all of these NIL deals will.
LINK
NIL - you are being paid for use of your name, image, or likeness… these aren’t gifts and you’ll have to contribute something in the way of name image or likeness toward whomever contracted you. Appearances, social media postings, autographs, photo shoots, etc. There will be contracts and there will be breaches of contract that we’ll see. There are going to be lots of kids hurting from not understanding the depth of what they’re getting into. Those under the table deals of old never saw Uncle Sam - all of these NIL deals will.
Posted on 2/3/22 at 10:22 pm to DeafVallyBatnR
If no entity is set up, the 1099 income would be reported on a Schedule C of their individual income tax return, form 1040.
On an assumed NIL payment of $100,000 subject to a 10% agency/agent fee filing single with no dependents:
The resulting realized $90,000 in income would be reduced by $6,358 as the deductible portion of Self-Employment taxes and $12,500 in the standard deduction and $14,218 in QBI deduction.
Leaving $56,874 in taxable income. With federal income tax of $8,261 and self-employment tax of $12,716 for a total tax bill of $20,977 to uncle sam. Please note that state income and self-employment taxes are not included in these figures. Using a conservative 5% that is an approx. $4,250 state tax bill.
To recap
$100,000 NIL payment
(10,000) agent fee
(20,977) federal income and self employment taxes
(4,250) state income taxes
_______
$64,773 after tax income
ETA: May not qualify for the QBI deduction due to the nature of the "business" and federal income taxes would be due on the $14,218. Used a quick online calculator, not actual tax prep software for the above illustration.
On an assumed NIL payment of $100,000 subject to a 10% agency/agent fee filing single with no dependents:
The resulting realized $90,000 in income would be reduced by $6,358 as the deductible portion of Self-Employment taxes and $12,500 in the standard deduction and $14,218 in QBI deduction.
Leaving $56,874 in taxable income. With federal income tax of $8,261 and self-employment tax of $12,716 for a total tax bill of $20,977 to uncle sam. Please note that state income and self-employment taxes are not included in these figures. Using a conservative 5% that is an approx. $4,250 state tax bill.
To recap
$100,000 NIL payment
(10,000) agent fee
(20,977) federal income and self employment taxes
(4,250) state income taxes
_______
$64,773 after tax income
ETA: May not qualify for the QBI deduction due to the nature of the "business" and federal income taxes would be due on the $14,218. Used a quick online calculator, not actual tax prep software for the above illustration.
This post was edited on 2/3/22 at 10:30 pm
Posted on 2/3/22 at 10:25 pm to MrVoodoo
Good learning lesson. Those who pay substantial taxes know.
Posted on 2/3/22 at 10:57 pm to Scatback1
They will be taxed as independent contractors receiving 1099s
Posted on 2/4/22 at 12:12 am to dwright369
quote:
They will be taxed as independent contractors receiving 1099s
yep. Immediately make sure that 40% of that goes somewhere safe. When the tax man comes around looking for his cut, 33-38% better be there or you're gonna have to pay more in penalties.
Posted on 2/4/22 at 12:45 am to DeafVallyBatnR
quote:
The only problem is it's not a huge amount of money and some of these families have never had enough money to pay taxes. So it is a problem for some.
The athlete is receiving the NIL income not the family. they don't file a family return.
Posted on 2/4/22 at 2:19 am to Curtis Lowe
Best answer so far.
The only thing is that QBID will probably go away in 2022, so that 14k will most likely be taxable in years 2-4.
The only thing is that QBID will probably go away in 2022, so that 14k will most likely be taxable in years 2-4.
Posted on 2/4/22 at 3:06 am to Curtis Lowe
I don’t know shite, but it sounds like you know what you’re talking about so I’ll take your word for it. 35% in taxes.
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