NIH and taxes

[DuckTownHusker]

Sounds like we need to establish a satellite campus in Kimball, which is about an hour from Cheyenne. Wyoming has some gray areas on residency, but living in the state for at least a year seems pretty common across various definitions.

We bring freshmen to the UNL-Kimball Football Camp, and allow them to get a residence in Cheyenne.

Either that or get the pork barrellers in the rotunda to drop income tax for the State of Nebraska.

 

[huskrthill]

HuSkaBob thanks for helping out with my dyslexsia. Yes I meant NlL My understanding is that pros have to pay taxes in every place they play. So this could be quite a sum based on how much players visiting from A M and other highly paid teams are paid.

The difference is that an NFL player is earning money based on playing the game. If that game is played in New York, they are paid to play in New York, and therefore taxed for earning money in New York. That reduces their taxable income in their home state.

NIL isn't a salary for playing a game. It's more like an endorsement deal. The players still can't be paid directly by the schools, so they're not earning income in other states like NFL players.

I suppose that an NIL deal could be structured in such a way, but I think that would be more the exception than the norm.

 

[DuckTownHusker]

Do Baseball Players Pay State Taxes? The Jock Tax and Other Facts

There’s nothing like the start of baseball season to give grownups a chance to feel like kids again. But for the players? It’s serious business. Another season means staying healthy, negotiating the best possible contract, and keeping on top of their taxes. Yes, taxes. Because if you think...

www.jacksonhewitt.com

If the NIL can be attributed to in state activity then the home state controls. But if it is earned elsewhere, it gets complicated. Look at what MLB players face:


“A baseball player gets a W-2 for every state where he played during the season, showing taxable income and withholding. Just like any other job.

The jock tax​

A baseball player pays income taxes not only in the state where he lives but in every state where he plays. But, since he doesn’t pay taxes twice on the same money, he’ll file a non-resident return for all those states and claim a credit from each state, to reduce the amount he owes to the state where he lives. This so-called “jock tax” has been around since the 1960s and, as you might guess, has never been very popular with players.

No credits​

If a player lives in one of the nine states without income taxes (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming), they won’t get a credit for taxes paid to another state”

This is undoubtedly why pro athletes have managers and agents. There's a myriad of crap to deal with behind the scenes.

 

[HuskerWeatherman]

If there was a lot of money involved I'd darn sure establish residency in one of these states.
Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming do not levy state income taxes, while New Hampshire doesn't tax earned wages.

As usual be sure and avoid CA with an outrageous state income tax of 13.3%.

Interestingly, among states with Big Ten schools, there's two in the top 10 nationally for highest state income tax rate.

Iowa is #2 nationally and Nebraska is #10.

Yeah, it's nice not having to file state income taxes in Texas.

 

[tango]

I think you meant NIL, not NIH (National Institutes of Health) which is a US governmental agency that is funded by taxes, and tax exempt.

As far as your position, income is income and therefore taxable. Towns and states that host a bowl can collect sales taxes and such, but that's going to be covered by the school in most cases. I don't see how additional income by the players has any tax impact.

The states tax income where it is earned. Professional athletes pay taxes in each state and locality in which they play.

Is the recipient of NIL being paid for performance or some other activity. That will dictate the taxing jurisdictions that they will be subject to income tax I believe.

 

[tango]

No, pros pay taxes in the location of their team. The argument is always brought up that Texas should attract pro athletes because of the lack of state income tax.

It's just like how if I travel out of state for a work conference, my income for those days isn't taxable in the location I travel to.

Where an individual is taxed can be complicated subject to many technicalities. Income is taxed in the location earned and is allocated to the taxing location with different rules by each taxing jurisdiction. States will not chase small dollars for their fair share but they do chase professional athletes for ”their fair share”. The same applies to bands and other performers. You might start looking over your shoulder for state tax collectors.

 

[nems]

That might have figured into Ewers plans when he transferred from Ohio State to Texas. Makes more sense now

I think Texas state law didn't allow him to make that money because he was under 18. So going to OSU provided him an income opportunity not available in Texas.

 

[djlhuskerfan]

I think Texas state law didn't allow him to make that money because he was under 18. So going to OSU provided him an income opportunity not available in Texas.

Sounds like OSU got used in this case. Couldn't happen to a better team LOL

 

[cthusker]

Interestingly, among states with Big Ten schools, there's two in the top 10 nationally for highest state income tax rate.

Iowa is #2 nationally and Nebraska is #10.

Yeah, it's nice not having to file state income taxes in Texas.

Lets not forget MN at 9.85%, WI at 7.65% and NJ at 10.75% those tax rates might influence where a highly rated recruit decides which scholarship to choose. Play a year and get gouged at 10% tax against their NIL earning and hello portal.

 

[HuskerWeatherman]

Lets not forget MN at 9.85%, WI at 7.65% and NJ at 10.75% those tax rates might influence where a highly rated recruit decides which scholarship to choose. Play a year and get gouged at 10% tax against their NIL earning and hello portal.

Although those numbers are total tax burden (including sales and property taxes).

Just pure state income tax, MN, WI, and NJ are lower (not top 10). At least according to what I see online.

 

[707194959725]

I happen to be a CPA and do taxes. I raised this issue at a tailgate put on by the Dean of CBA this fall.
UNL is providing resources to athletes to help make sure this is handled. The athletes getting a substantial sum from NIL face significant income taxes and also potential employment taxes with very likely little or no withholding. This could be a huge problem for any university not ahead of this.

 

[DrNUke]

Although those numbers are total tax burden (including sales and property taxes).

Just pure state income tax, MN, WI, and NJ are lower (not top 10). At least according to what I see online.

You can't add percentages. As an example: 7% state income tax plus 2.2% property tax is not a 9.2% tax burden on income. My personal 2.2% property tax in Nebraska takes 10%+ of my income, not 2.2%.

Need lots of qualifiers when comparing total taxes between two states.

I only have experience in Illinois, Georgia, and Nebraska. Georgia is better than Illinois and much better than Nebraska.

 

[EastOfEden]

So in a higer tax state you pay a higher NIL. That's what they do for lots of other jobs in those states.

Or you pay them something extra under the table to make up the difference. Lots of schools have established a system for doing this.

I don't expect this to remain lily white for very long.

 

[KSBV]

I happen to be a CPA and do taxes. I raised this issue at a tailgate put on by the Dean of CBA this fall.
UNL is providing resources to athletes to help make sure this is handled. The athletes getting a substantial sum from NIL face significant income taxes and also potential employment taxes with very likely little or no withholding. This could be a huge problem for any university not ahead of this.

They are going to have to pay quarterly estimates, too.

 

[cthusker]

Although those numbers are total tax burden (including sales and property taxes).

Just pure state income tax, MN, WI, and NJ are lower (not top 10). At least according to what I see online.

In NJ there are 7 brackets of which 10.75% is the highest bracket on a million. Their lowest bracket starts at 20k (income) with a 1.4% tax so yes it varies. There are other factors such as personal exemptions (not much) but NJ doesn't even allow you to deduct any federal taxes or property tax. It's a total hose job imo.

These NIL payments are going to cause kids receiving them to learn a lot about how the real world works!