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NIH and taxes

nems

Wubba Lubba Dub Dub
15 Year Member
Actually they don't HAVE to. But, in the 2nd year they will need to to avoid penalties (sans withholding).
Another piece to the puzzle that any decent tax person will advise them on.

Doesn’t it depend on if they paid or had withheld at least as much in income taxes as they paid in the prior year?
 

huskon4ever!

Scout Team
10 Year Member
Doesn’t it depend on if they paid or had withheld at least as much in income taxes as they paid in the prior year?
Depends on their tax liability from prior year. To avoid penalties and interest they have to pay in 100% of their prior year tax liability if AGI is less than 150k; more than 150k and they would need to pay in 110% of prior year tax liability. This is regardless of filing status.
 

HuSkaBob

Husker Geek
5 Year Member
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.
The difference is that pro athletes are being paid to play -- NIL payments are endorsements. If a college athlete was being paid for an appearance in Council Bluffs, then they would have to pay taxes to Iowa (services rendered at a location). Otherwise I would think most of the income would be taxed in Nebraska.
 

huskon4ever!

Scout Team
10 Year Member
Actually they don't HAVE to. But, in the 2nd year they will need to to avoid penalties (sans withholding).
Another piece to the puzzle that any decent tax person will advise them on.
All of these athletes will be receiving a 1099 as they are not viewed as employees. Any decent tax professional would advise them to set up a LLC, file a 2553 and flip them to a SCorp. Then pay a reasonable wage and avoid some SE tax. Some pretty basic but slam dunk things.

Instead they'll pay 47 different people to "manage" their money who "have their best interest in mind"...
 

707194959725

Put Me In Coach
2 Year Member
All of these athletes will be receiving a 1099 as they are not viewed as employees. Any decent tax professional would advise them to set up a LLC, file a 2553 and flip them to a SCorp. Then pay a reasonable wage and avoid some SE tax. Some pretty basic but slam dunk things.

Instead they'll pay 47 different people to "manage" their money who "have their best interest in mind"...
The reasonable wage part might get a little tricky in these instances.

And the "managers" will make sure they get paid before the tax liabilities come due.
 

tango

Recruit
The difference is that pro athletes are being paid to play -- NIL payments are endorsements. If a college athlete was being paid for an appearance in Council Bluffs, then they would have to pay taxes to Iowa (services rendered at a location). Otherwise I would think most of the income would be taxed in Nebraska.
I agree. That is what I was trying to state in my post. The terms of the contract and where the service is being provided will dictate which state should collect the tax. States generally don’t have a robust compliance division so they likely won’t have the ability to chase s,
mall dollars.
 

tango

Recruit
I wonder about the abilty to deduct the payment. Is it really reasonable and necessary business deduction? I could argue either side of that issue.
 

CPUHog

Recruit
2 Year Member
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.
Why would it be a problem for the University? They have no liability in these cases.
 

CPUHog

Recruit
2 Year Member
I wonder about the abilty to deduct the payment. Is it really reasonable and necessary business deduction? I could argue either side of that issue.
It’s an endorsement deal like any other endorsement deal. Those are definitely deductible.
 

707194959725

Put Me In Coach
2 Year Member
Why would it be a problem for the University? They have no liability in these cases.
They should be advising their NIL students to avoid these pitlfalls like UNL is trying to do.
It's going to be a bad thing for any university if an athlete is all over social media about how his school didn't give him the advice and help needed and is facing a big tax bill he can't pay. And, the up and comers will notice.
 

huskon4ever!

Scout Team
10 Year Member
The reasonable wage part might get a little tricky in these instances.

And the "managers" will make sure they get paid before the tax liabilities come due.
For 99% of these athletes, no it won't be. Most of these guys are going to make less than a couple hundred k.

For the others, any tax advisor worth their salt will figure it out.
 

juju

The future starts now.
2 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:
South Dakota has some awesome trust laws and advantages. If they are smart enough to do what rich people and highly paid athletes do, more power to them. I hate how college sports have changed but there is too much money involved for the student athletes not to get a more equitable share. But this is somewhat a popularity contest as well seems like.
 
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