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NIH and taxes

Full Husker

Recruit
10 Year Member
The NIH, especially as illustrated by A & M pay outs, raises this issue.: the players with their income I expect will have to pay social security and taxes, both US, and State and local if there are any. In addition, I expect towns and states where away, bowl, and play off games are played aid will collect taxes (at least they should). Players with incomes over a certain amount who have not made arrangements should be suspended until these financial responsibilities are made. Conferences it seems to be should begin discussing a salary cap. What do you Max experts think?
 

HuSkaBob

Husker Geek
5 Year Member
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.
 

djlhuskerfan

Travel Squad
10 Year Member
I wondered how this would work with tax issues? Is money paid directly to athlete immediately or is it deferred to later time?
 

DuckTownHusker

Blackshirt Sith Lord
10 Year Member
I wondered how this would work with tax issues? Is money paid directly to athlete immediately or is it deferred to later time?

That's all part of whatever NIL deal they strike.

Do you get paid bi-weekly or once a month? 1099 or W2? Straight salary or bonuses and commission? It's the same conversation.

My hunch would be that players must pay income tax based on the state they reside in. I'm sure if you play for the Packers, you don't pay a different income tax when you travel to Illinois (Bears) or Michigan (Lions) for an away game. You probably fall subject to Wisconsin income tax.

College athletics poses an interesting wrinkle here since some states like California have a ridiculously high tax burden. I wonder if future recruits from places like CA or IL might not opt to establish residency in Nebraska as a way to lower Uncle Sam's cut. If you're talking about a high profile kid with lots of NIL potential, that could be the difference of tens of thousands in tax liability. Night be smart to agree to terms that defer payment (income) until you can establish residency in a lower income tax state like Nebraska.

I could also see this having an effect at the midmajor level as states like Wyoming could become more attractive if you're deciding between playing for the Cowboys or neighboring Colorado State with those lofty CO taxes.
 

djlhuskerfan

Travel Squad
10 Year Member
That's all part of whatever NIL deal they strike.

Do you get paid bi-weekly or once a month? 1099 or W2? Straight salary or bonuses and commission? It's the same conversation.

My hunch would be that players must pay income tax based on the state they reside in. I'm sure if you play for the Packers, you don't pay a different income tax when you travel to Illinois (Bears) or Michigan (Lions) for an away game. You probably fall subject to Wisconsin income tax.

College athletics poses an interesting wrinkle here since some states like California have a ridiculously high tax burden. I wonder if future recruits from places like CA or IL might not opt to establish residency in Nebraska as a way to lower Uncle Sam's cut. If you're talking about a high profile kid with lots of NIL potential, that could be the difference of tens of thousands in tax liability. Night be smart to agree to terms that defer payment (income) until you can establish residency in a lower income tax state like Nebraska.

I could also see this having an effect at the midmajor level as states like Wyoming could become more attractive if you're deciding between playing for the Cowboys or neighboring Colorado State with those lofty CO taxes.
That might have figured into Ewers plans when he transferred from Ohio State to Texas. Makes more sense now
 

cthusker

You talken to me?
5 Year Member
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%. :mad:
 

Cornhuskers7

Recruit
NIL money would be just like any other income. It would be taxable. Players need to make sure they claim it on their income taxes and pay the appropriate amount of tax on them, assuming none was withheld, which for most NIL money you would assume it isn't.

Most NIL money isn't like being employed by an employer where they will pull out tax money and cut you a regular check. NIL money, in most cases, is freelance. In all likelihood athletes would receive something like a 1099 which would say how much a given company paid them during the year (to advertise, make appearances, whatever). The athlete would then be responsible for claiming it on their taxes and paying anything owed.

If you are making small sums of money from NIL, chances are pretty good this wouldn't be a big deal. However, if you are making 5 or 6 figures, this tax would add up. Would be worth some of the bigger earners hiring an accountant, or a management team to handle the finances. I think there are already some resources that have been created to help athletes with this. Lots of social media influencers have to go through these same hurdles too. It's different from regular employment, but not uncharted waters.
 

Full Husker

Recruit
10 Year Member
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.
 

Porkchopexpress

Junior Varsity
10 Year Member

My hunch would be that players must pay income tax based on the state they reside in. I'm sure if you play for the Packers, you don't pay a different income tax when you travel to Illinois (Bears) or Michigan (Lions) for an away game. You probably fall subject to Wisconsin income tax.
To the bolded. I'm pretty sure professional athletes are subject to taxes on their game check in whichever state they play a game, regardless of where their "home" is located. So, members of the Green Bay Packers pay Illinois taxes on their game check when playing at Chicago, and so on from there. Things like incentive bonuses and signing bonuses are subject to taxes where the team is headquartered.

Since the NIL is like the wild-west right now, who knows how these contracts are written up, but I'm guessing they are more like signing bonuses, where an individual gets a lump sum of money all at once, and not on a game-by-game basis.
 

Cornhuskers7

Recruit
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.
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.
 

weaver75

Special Counsel
5 Year Member

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”
 

Cornhuskers7

Recruit
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.

I stand corrected. Tax law is stupid.

That being said, NIL money would be different then player salary. NIL money is specifically not a salary to play the sport. Rather money that is made based on the things players can do off the field with their popularity. This should still stay in the home state.
 
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