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.
-
You do not need to register if you are not going to pay the yearly fee to post. If you register please click here or log in go to "settings" then "my account" then "User Upgrades" and you can renew.
NIH and taxes
- Thread starter Full Husker
- Start date
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?
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.
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.
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"...
Yes, that's why I said the 2nd year.
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.
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.
Why would it be a problem for the University? They have no liability in these cases.
It’s an endorsement deal like any other endorsement deal. Those are definitely deductible.
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.
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.
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.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%.
