Do NIL Athletes Need to Pay Quarterly Taxes? (What College Athletes Must Know)

If you are earning NIL income and not making quarterly tax payments, the IRS may hit you with penalties even if you pay everything at tax time. Here is what you need to know.

Many college athletes earning NIL income do not realize they may be required to pay taxes throughout the year. This is because NIL income usually does not have taxes withheld. 

Instead of paying taxes once per year, NIL athletes often need to make quarterly estimated tax payments to the IRS. 

If you do not, you may owe penalties even if you pay everything at tax time. 

This guide explains when NIL athletes must pay quarterly taxes and how it works. 

1. Why NIL Athletes May Need to Pay Quarterly Taxes

NIL income is typically treated as self employment income. That means athletes are considered independent contractors. 

Unlike W-2 jobs: 

• No taxes are withheld 

• No employer pays half of Social Security and Medicare 

• No automatic tax payments 

Because of this, the IRS expects athletes to pay taxes during the year. 

This is done through quarterly estimated tax payments. 

2. When NIL Athletes Must Pay Quarterly Taxes

You may need to pay quarterly taxes if: 

• You expect to owe $1,000 or more in taxes 

• You receive NIL income with no withholding 

• You are earning consistent NIL income 

• You have sponsorship deals or collectives paying you

Most NIL athletes earning over $5,000 to $10,000 should assume quarterly taxes apply. 

3. Quarterly Tax Due Dates

Estimated tax payments are typically due: 

• April 15 

• June 15 

• September 15 

• January 15 

These payments cover income earned throughout the year. 

Missing these deadlines may result in IRS penalties. 

4. Example: NIL Athlete Quarterly Taxes

Let’s say a college athlete earns: 

• $20,000 in March 

• $15,000 in June 

• $10,000 in September 

Total NIL income: $45,000 

Estimated taxes might be around: $12,000 total 

Instead of paying $12,000 at tax time, the athlete would pay roughly: 

1. April payment: $3,000 

2. June payment: $3,000 

3. September payment: $3,000 

4. January payment: $3,000 

This spreads out the tax burden. 

5. What Happens If NIL Athletes Do Not Pay Quarterly Taxes

If quarterly taxes are not paid, the IRS may assess: 

1. Underpayment penalties 

2. Interest charges 

3. Large tax bill at filing 

4. Cash flow problems 

Even if you pay in full at tax time, penalties may still apply. 

This is one of the most common NIL mistakes.

6. How Much Should NIL Athletes Pay Quarterly?

A safe rule: 

Set aside 30 percent of NIL income for taxes. 

Example: 

Athlete receives $10,000 NIL payment 

Set aside $3,000 

Use remaining $7,000 

You can then use those funds to make quarterly payments. 

This keeps you safe. 

7. Do All NIL Athletes Need to Pay Quarterly Taxes?

Not always. 

You may not need quarterly payments if: 

• NIL income is very small 

• Taxes are covered by other withholding 

• You are claimed as a dependent and have minimal income 

• You just started earning NIL late in the year 

However, most athletes earning meaningful NIL income should plan for quarterly payments. 

8. Do High School NIL Athletes Pay Quarterly Taxes?

Yes, they may. 

Even if an athlete is under 18, NIL income is still taxable. 

Quarterly payments may still apply. 

This is where parents often become involved in planning. 

9. Do NIL Athletes Pay State Quarterly Taxes?

Sometimes. 

This depends on the state: 

• Some states require quarterly payments 

• Some do not 

• Some have different thresholds 

Athletes earning NIL income in multiple states may have additional requirements. 

This is common with national sponsorship deals. 

10. How NIL Athletes Can Prepare for Quarterly Taxes

Here are simple steps: 

1. Open a separate tax savings account 

2. Set aside 30 percent of NIL income 

3. Track all NIL payments 

4. Track deductions 

5. Make payments before deadlines 

6. Work with a tax advisor 

This avoids surprises.

11. Common Quarterly Tax Mistakes NIL Athletes Make

• Not saving for taxes 

• Spending all NIL income 

• Waiting until tax season 

• Not tracking income 

• Ignoring state taxes 

• Missing deadlines 

• Not planning ahead 

These mistakes often lead to large tax bills.

12. Quarterly Taxes Become More Important as NIL Income Grows

Quarterly taxes are especially important when athletes: 

• Earn over $25,000 in NIL income 

• Have multiple deals 

• Receive lump sum payments 

• Have endorsement contracts 

• Earn income across multiple states 

• Form LLCs or S Corps 

At this point, planning becomes critical.

13. NIL Tax Planning Helps Avoid Penalties

Proper planning allows athletes to: 

• Avoid penalties 

• Spread out payments 

• Reduce taxes with deductions 

• Create structure 

• Stay compliant 

• Plan for growth 

This is why many NIL athletes choose proactive tax planning.

Need Help With NIL Quarterly Taxes?

If you are earning NIL income and are unsure whether you need to make quarterly payments, it is better to plan early. 

Aureus Advisory helps NIL athletes: 

• Calculate quarterly payments 

• Plan for taxes 

• Track deductions 

• Structure NIL income 

• Avoid IRS penalties 

Schedule a NIL consultation to build a plan based on your NIL income.