Wonder how many of these kids get audited by the IRS. Probably a real good place to find under reported income? Even though I’m sure they keep very accurate records. 🤣
Tax implications with NIL money
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This! I’m gonna laugh my ass off when they get audited and don’t have the money to pay taxes because they spent it all.
Not a tax expert but wouldn’t they have to file and pay quarterly? State and fed?
Btw wouldn’t Florida, Tennessee and all state tax free states be the best place to go for nil money? California being the worst possible choice.
Yep! That’s why I laugh at Burch/Lloyd! That million sounds awesome until State/Fed kicks in
Oh there will be a larger number of guys in tax trouble. Too young not to be. Bank it.
They better hope they make it big and big soon, (more than just a couple of years at an early age) or they will be paying back taxes at outrageous rates most if not all their adult lives. Lol
They better hope they make it big and big soon, (more than just a couple of years at an early age) or they will be paying back taxes at outrageous rates most if not all their adult lives. Lol
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Dumb. They’re gonna be waist deep in druggies, thugs and human waste while wondering what happened to all my money. I’m supposed to be ballin dawg. Probably should’ve studied finance and economics at some point. 😂
Damn, 15.3% self employment tax before you even get to state and federal tax. I Wonder if your responsible for Medicare and social security also with NIL
California Income Tax Calculator 2021
If you make $1,000,000 a year living in the region of California, USA, you will be taxed $461,800. Your average tax rate is 32.94% and your marginal tax rate is 37%. This marginal tax rate means that your immediate additional income will be taxed at this rate.And that’s Just state tax champ
FEDERAL TAX
If you're single, only your 2022 income over $539,900 is taxed at the top rate (37%). The rest is taxed at lower rates as described above. So, for example, the tax on $1 million for a single person in 2022 is $332,955.Dec 14, 2022
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Bad timing too as the Prez figures to hire 88,000 more IRS agents or some such ridculous number. This could keep them busy though.
I, personally, find it very difficult to feel sorry for millionaires.
Actually, no self employment taxes. These deals are structured as royalty payments for use of your likeness. So definitely taxable for income taxes, but not self employment nor wages.
Maybe but this is what I read
- Self-Employment Tax: Any “compensation” from NIL deals is self-employment income, which means you must pay self-employment tax. SE tax is in the 12-15% range for the first $142k of income.
Like my tax advisor once told me, ... "Not to worry! That new home office remodel expense you're doing will certainly cover that and have you ever paid any taxes since working with me???".
So very true. But somehow I doubt a lot of these kids drop a dime on a cpa until they get that letter………plus they don’t have a home or an office lol
I am skeptical that NIL royalties, if structured correctly, won't be considered royalties not self-employment income. I mean you can be a paraplegic and have NIL money. You can die and have NIL money paid to your estate. Somewhere there is a little old lady that gets lots of money every time an image or movie of Marilyn Monroe is used. She never even met her, Marilyn left those rights to her long-time agent in her Will, then he left them to his wife. These NIL rights are little different.
If schools were smart they would provide that (CPA) as a service or if not allowed, have the NIL contract provide it.
A CPA is a Certified Public Accountant. Their ONLY claim to fame is being able to drive down the road using only a rear view mirror. They ONLY organize the information given to them by the client. They do not even verify the information given to them unless paid an additional fee for a Certified Audit. They better NOT offer business advice or their ass was mine. YES! There are a few CPA's that are also licenced Business Analyst, very few, but, the vast majority would never risk their CPA license giving any business advice, other than for accounting purposes ONLY.
Messina said he has observed that, after speaking with college and university athletic directors and student-athletes, only the “biggest promoted athletes” currently receive sufficient tax assistance. “The vast, vast majority” of student-athletes lack the help needed to navigate the tax code, he told Checkpoint.
Importantly, since student-athletes aren’t considered employees of a collective, their school, or the NCAA, they may be on the hook for self-employment tax as independent contractors. As such, student-athletes should complete a Form W-9 before conducting NIL activities. By January 31 in the year following NIL work, student-athletes should receive a Form 1099-NEC, Nonemployee Compensation, if the total earnings exceed $600. Additional information returns should be provided for cash receipts from peer-to-peer platforms such as Venmo or PayPal.
Student-athletes may also need to make quarterly estimated tax payments or incur penalties, as taxes aren’t withheld as they are in an employee’s paycheck. The self-employment Social Security and Medicare rate is 15.3%. Ron Brown, president and co-founder of R.L. Brown Wealth Management and Athlete Essentials, advised student-athletes to pay at least $1,000 in estimated taxes each quarter.
tax.thomsonreuters.com
Importantly, since student-athletes aren’t considered employees of a collective, their school, or the NCAA, they may be on the hook for self-employment tax as independent contractors. As such, student-athletes should complete a Form W-9 before conducting NIL activities. By January 31 in the year following NIL work, student-athletes should receive a Form 1099-NEC, Nonemployee Compensation, if the total earnings exceed $600. Additional information returns should be provided for cash receipts from peer-to-peer platforms such as Venmo or PayPal.
Student-athletes may also need to make quarterly estimated tax payments or incur penalties, as taxes aren’t withheld as they are in an employee’s paycheck. The self-employment Social Security and Medicare rate is 15.3%. Ron Brown, president and co-founder of R.L. Brown Wealth Management and Athlete Essentials, advised student-athletes to pay at least $1,000 in estimated taxes each quarter.
The Long Read: Tax Implications of College Collectives, NIL Deals
More than a year after the Supreme Court ruled that student-athletes can be compensated for the use of their name, image, or likeness (NIL), new bipartisan legislation would eliminate a tax incentive for contributions to tax-exempt affiliates of colleges and universities.
tax.thomsonreuters.com
a good and experienced CPA can certainly provide an individual or business owner with valuable business advice related to taxes, financials, documentation, preparing for audits, preparing reports for other businesses, shareholders, or portions of business plans. It's certainly not all related to the "rear view mirror."
A CPA can offer- and often does- provide excellent service relating to planning for the future, forecasting, advanced tax planning, estate planning, etc.
A university making available a CPA for athletes to discuss things like how much in taxes they can expect to owe or methods to reduce those taxes makes good sense.
A Certified Financial Advisor is what you mean. LOL!!! Please re-read your comments. Every single item you listed is simply an accounting related function, from undocumented information provided by the clint. And certainly could never be considered as 'Advising', when you have no idea, whatsoever, as to the reliability of the information provided. Ever hear the term "Cooking the Books"? Ever hear the term 'Due Diligence'? A CPA giving Business Advice is no different than your opinion of who is going to win the CFP next year.
There was an excellent ethnic story that can no longer be told, about a company wanting to hire an accountant. Applicant #1 was asked ... How much is 2+2? Four was his answer. Applicant #2 was asked the same question and answered the same amount. Applicant #3, when asked the same question, but responded ... "Do you have a figure in mind?" Guess who got the job?
A CPA is like teats on a bullfrog. But, your thinking provided quite a good living for me. Therefore, God Bless Your Like Thinking Individuals.
By the way, ever hear of a CPA being named co-respondent at a bankruptcy trial? Didn't think so.
I wasn't suggesting business advice, I was suggesting helping them pay and file their income taxes and income tax returns correctly. That is what tax CPAs are really good at. Most Business Analysts I know don't even prepare their own tax returns, they use a tax CPA.
Here is a different article on the subject. It shows there is a way to make these royalties, even if most aren't doing it that way.Messina said he has observed that, after speaking with college and university athletic directors and student-athletes, only the “biggest promoted athletes” currently receive sufficient tax assistance. “The vast, vast majority” of student-athletes lack the help needed to navigate the tax code, he told Checkpoint.
Importantly, since student-athletes aren’t considered employees of a collective, their school, or the NCAA, they may be on the hook for self-employment tax as independent contractors. As such, student-athletes should complete a Form W-9 before conducting NIL activities. By January 31 in the year following NIL work, student-athletes should receive a Form 1099-NEC, Nonemployee Compensation, if the total earnings exceed $600. Additional information returns should be provided for cash receipts from peer-to-peer platforms such as Venmo or PayPal.
Student-athletes may also need to make quarterly estimated tax payments or incur penalties, as taxes aren’t withheld as they are in an employee’s paycheck. The self-employment Social Security and Medicare rate is 15.3%. Ron Brown, president and co-founder of R.L. Brown Wealth Management and Athlete Essentials, advised student-athletes to pay at least $1,000 in estimated taxes each quarter.
The Long Read: Tax Implications of College Collectives, NIL Deals
More than a year after the Supreme Court ruled that student-athletes can be compensated for the use of their name, image, or likeness (NIL), new bipartisan legislation would eliminate a tax incentive for contributions to tax-exempt affiliates of colleges and universities.
Federal Tax Considerations
The NCAA notes that monetary and non-monetary compensation are taxable income, and student-athletes who benefit from their NIL must file a tax return. Common forms of NIL income include:- Sponsorship/service income is one of the most common incomes student-athletes derive from NIL deals. Under these types of arrangements, the athlete must present logos or products at an event for which they receive compensation.
- Cash awards from NIL income will likely need to be reported on Form 1099-NEC, which the student-athlete will receive every year from the organization the athlete represents. Such payment must be included in the student’s taxable income. Notably, these earnings differ from W-2 wages, and no income taxes will be withheld. The athlete will be subject to both income tax and self-employment tax and will be required to file returns. The student-athlete will likely need to make quarterly estimated tax payments for such income.
- Royalty income is compensation for using NIL on media, such as video games. Royalty income is included in the athlete’s taxable income. The critical difference between royalty income and sponsorship/service income is that the athlete is not obligated to present the sponsor’s logo or products in the case of royalties.
I've seen it all now... the ncaa giving tax advise. Seems like there ought to be a disclaimer at the bottom of the page warning that they are not tax accountants. I didnt even realize they had a horse in this race. Maybe it's just me, but its kinda weird they would even weigh in.
Well they may never have to get audited. You would only get audited if you did not report income.
There are a number of ways to structure royalty payments, so it would depend on the structure as to what form would be required to file, and how often e.g. quarterly vs yearly
That's what the 15.3% is - SS and Medicare taxes! INCOME TAX is a separate animal in itself! The ones going to CA will find it a tad harsh! Also have to wonder how long it takes some states to consider EARNINGS being taxable because a game is played in that state??? That's what the nfl/nba and other professionals have to endure so I'd guess the nil'ers will find the same! Should be a LOT of new MILLIONAIRES - not the players, but the TAX GUYS!
Tax guys will get a piece but the government has figured out a way to tax the same money for the millionth time. 80% of this will go right back to politicians pockets just as planned
Yep — they just enter what you give them onto TurboTax or some other tax software program.
You are very much misinformed. All of the Big 6 CPA firms and most large CPA firms offer Management Advisory Services, and in fact have completely separate departments for providing these services. It is one of largest services offered by CPA firms. Personally, I have been a CPA for 42 years. Currently, that is ALL I provide in services to my clients. I don't prepare tax returns, nor do I perform audits. My practice consists solely of Business Consulting. My clients pay me very well for that service.
You are also wrong as to verifying information. Any reputable CPA will ask questions of his clients after receiving information to prepare tax returns, especially if he sees something unusual or inconsistent. For example, I found a large amount of fraud by a client's employee by reviewing the information to be given to the tax preparer. The employee listed $300k of interest expense on the income statement which was bogus. I looked at the Balance Sheet and noticed there was only $400k in debt, so the $300k in interest was not possible. I also noticed an unusual amount of bank charges. This employee was issuing bogus information to try to hide his theft.
All the CPAs I refer my clients to for tax preparation review the information and ask questions even thought they already know I have reviewed it as a third party consultant. For example, if there is a large amount of maintenance expense, they will ask for detail of that to be sure there are no capital items being charged to expense. While they do not audit the information, they do look at it and will ask logical questions.
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Grow Up and quit acting like you have any idea, whatsoever, as to what you are talking about. Asking questions (even 4 & 5 times) is not verifying information. You embarrass yourself with your childish examples. Your "If you can't dazzle 'em with your brilliance, baffle 'em with your Bullshit.' method of explanations is laughable. Go Away and play with your toys, kid. .... In words, even you can understand, You're full of crap! And I'm certainly not the first one to tell you that!
I didn’t want to be the one to call him out, but thank you! HAHA
"Their ONLY claim to fame is being able to drive down the road using only a rear view mirror." You're a total ignorant idiot! Business advice is a core service provided by CPAs as well as tax planning, estate planning, and transaction analysis. Few business decisions are made without tax and financial analysis which are provided by CPAs.
"They do not even verify the information given to them unless paid an additional fee for a Certified Audit." You are not only ignorant but a liar as well.
"They better NOT offer business advice or their ass was mine. YES! There are a few CPA's that are also licenced Business Analyst, very few, but, the vast majority would never risk their CPA license giving any business advice, other than for accounting purposes." They do it every day and even have whole departments dedicated to this. Also, FYI, according to the SCLLR the state of SC has no such license as a "Business Analyst" so you clearly have no idea what the hell you are talking about. Your idiocy is apparent for all to see.
A CPA can certainly provide the items I mentioned above- none of which require a CFP or a "Certified Financial Advisor".
The industry terms I am familiar with are CFP (Certified Financial Planner), CFP (Certified Financial Planner), CFA (Chartered Financial Analyst), and ChFC (Chartered Financial Consultant). All can be considered "advisors." But these are industry terms. Some CFPs are also CPAs. Some CPAs are also CFPS - and various combinations.
and some CPAs are also tax attorneys. Some tax attorneys are also CPAs.
Many businesses- like my former law firm had a CPA on staff. He certainly knew the "reliability of the information" since he was responsible for compiling it, reviewing it, maintaining it and preparing forecasts.
Almost everything you wrote, as JGH said, is incorrect.
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