Educational reference · 31 sources, 31 primary

NIL and revenue sharing, from the ground up

College athlete compensation changed twice in four years — once when NIL opened in 2021, again when schools began paying athletes directly in 2025. The professionals advising these athletes are being asked tax, contract and immigration questions that did not exist when they trained. This is a plain-language reference to what the rules actually say, with every section linked to the body that issued it.

Our working paperTreaty verification memoEvery treaty royalty rate we apply, reconciled line by line to the IRS column it came from, dated, with the characterization calls where we diverge and why. Built for an attorney or CPA to check us — and to sign.Read the memo →

Part one

The foundations

Two systems now run in parallel, and most confusion starts by treating them as one.

Definition

NIL — name, image and likeness

The athlete’s right to be paid for commercial use of their own identity. It is not payment for playing. On 30 June 2021 the NCAA adopted an interim policy suspending its own rules against athletes earning from NIL.

Definition

Revenue sharing

A school paying its own athletes directly out of athletic-department revenue, permitted under the settlement of House v. NCAA. Capped per school, and centrally administered.

Two features of the 2021 policy still shape every question professionals get asked. First, it was interim — a stopgap pending federal legislation or new NCAA rules, which is why the ground has kept moving. Second, it deferred heavily to state law: athletes may engage in NIL activity consistent with the law of the state where their school sits, so the operative rules differ by jurisdiction.

Sources NCAA — NCAA adopts interim name, image and likeness policy (June 30, 2021) · NCAA — Name, Image and Likeness

The two, side by side

	Revenue sharing	NIL
Who pays	The school	Brands, collectives — third parties
What for	Participation, under the settlement	Use of the athlete’s identity
Capped?	Yes — a per-school pool	No cap; reviewed for fair-market value
Who oversees it	College Sports Commission (CSC)	NIL Go clearinghouse, plus state law
Began	2025	2021

An athlete can have both, and they are not documented or taxed identically.

The numbers that govern it

Per-school cap · 2025-26

$20.5M

$20,500,000

NIL Go review threshold

$600

Third-party deals at or above this are reviewed

Enforcement

CSC

College Sports Commission (CSC)

A number this page will not give you

The cap rises over the life of the settlement, and figures for later years circulate widely. The cap for the following year is not yet a confirmed figure in our rules layer, so this page does not print one. Our engine carries the 2025-26 cap forward, flagged as pending, rather than adopting an estimate. For a forward-year number, go to the settlement administrator or the Commission — not here.

Sources College Sports Commission — College Sports Commission · College Sports Commission / Deloitte — NIL Go — third-party NIL deal clearinghouse

High school athletes

High school NIL is governed neither by the NCAA nor by the settlement, but by each state high school athletic association. Rules differ sharply by state. The NFHS position has been that athletes own their name, image and likeness but not the school’s uniform or marks — which is why most permissive state rules still bar school insignia. Because the count of permitting states changes as associations amend bylaws, this page publishes no tally; the governing document is the athlete’s own state association handbook.

Source NFHS — Name, Image and Likeness for Interscholastic Athletes — What Does It Look Like?

Part two

How the money is taxed

Where the profession gets the most questions and the least has been written. The IRS now publishes NIL-specific guidance; this follows it closely and links to it throughout.

Form 1099 threshold · 2025

$600

Below it, no form issues — the income is still taxable

Form 1099 threshold · 2026

$2,000

Raised, so fewer forms are issued

Prevailing classification

1099

Unsettled — see below

It is taxable — including when it is not cash

The IRS treats NIL income as generally taxable, defining it to include gain “in cash, property, or services.” It specifically calls out bartering — merchandise, gift cards, and services received such as haircuts or even legal and accounting services. A car loaned for a season and a bag of apparel are not outside the system because no money moved.

Sources IRS — Name, Image and Likeness (NIL) Income · IRS — Publication 525 — Taxable and Nontaxable Income

Employee or contractor — and why it is unsettled

Whether the money is wages or self-employment income turns, in the IRS’s framing, on the degree of control the payer exercises. Paid as an employee, it is reported on Form W-2 with FICA withheld. Paid as a contractor, it is self-employment income subject to SECA, on Form 1099-NEC — or as royalty on Form 1099-MISC where the payment is genuinely for use of identity rather than services performed.

Our rules layer records the prevailing practice for 2025-26 as 1099, with this caveat attached verbatim: “1099 prevailing; royalty (1099-MISC) vs NEC (1099-NEC) by activity; unsettled in litigation”. We flag it rather than smoothing it over: the classification drives self-employment tax, deductibility and entity planning, and a confident answer here would be a confident answer to a question the courts have not finished with.

Sources IRS — Name, Image and Likeness (NIL) Income · IRS — About Form 1099-NEC — Nonemployee Compensation · IRS — About Form 1099-MISC — Miscellaneous Information · IRS — About Schedule SE (Form 1040) — Self-Employment Tax

Self-employment tax is the part that surprises people

An athlete treated as a contractor owes both halves of Social Security and Medicare on net earnings — the employer half is not being paid by anyone else. This sits on top of income tax, is computed on Schedule SE, and is the most common reason a first-year NIL earner is short at filing.

Sources IRS — Name, Image and Likeness (NIL) Income · IRS — About Schedule SE (Form 1040) — Self-Employment Tax · IRS — Instructions for Schedule C (Form 1040) · IRS — Publication 334 — Tax Guide for Small Business

Quarterly estimated payments

Because nobody withholds from a 1099, the obligation to pay as income is earned falls on the athlete. Who must pay, when, and how the safe harbors work are set out in Form 1040-ES and Publication 505. The deadlines do not track calendar quarters evenly, which is a routine source of underpayment.

Sources IRS — About Form 1040-ES — Estimated Tax for Individuals · IRS — Publication 505 — Tax Withholding and Estimated Tax

Two thresholds that get conflated

The Form 1099 reporting threshold rose from $600 to $2,000 for 2026. A payer below it issues no form — and the income remains taxable and reportable by the athlete regardless. Separately, the NIL Go review threshold ($600) is a different number, set by a different body, for a different purpose.

Sources IRS — Name, Image and Likeness (NIL) Income · IRS — About Form 1099-NEC — Nonemployee Compensation

Expenses and records

Where the athlete is in business for themselves, ordinary and necessary business expenses are deductible against the income, and the IRS guidance asks for receipts, purchase orders, travel and mileage logs. That burden lands on people who have never filed a Schedule C.

Sources IRS — Name, Image and Likeness (NIL) Income · IRS — Instructions for Schedule C (Form 1040) · IRS — Publication 334 — Tax Guide for Small Business

Collectives, and the §501(c)(3) question

Many early collectives were organized as tax-exempt charities. In a June 2023 memorandum the IRS Office of Chief Counsel concluded that many nonprofit NIL collectives do not qualify under §501(c)(3), because the private benefit flowing to a narrow class of athletes is not incidental to any exempt purpose — assessed both qualitatively and quantitatively.

The memorandum speaks to the collective’s exemption, not to whether the athlete’s receipt is taxable. Payments received by an athlete are income regardless of how the payer is organized.

Sources IRS Office of Chief Counsel — Memorandum AM 2023-004 — NIL collectives and §501(c)(3) exemption · IRS Taxpayer Advocate Service — NIL Collectives · IRS Taxpayer Advocate Service — Name, Image, Likeness — Get Help

Part three

International athletes

The thinnest area in the profession. The one thing to hold onto: two entirely separate systems apply, run by different agencies, answering different questions.

System one

May they do the work?

Immigration · DHS, USCIS, SEVP

Asks whether the activity is authorized employment for someone in F-1 or J-1 status. Getting this wrong risks status, not just money.

System two

How is it taxed?

Tax · IRS

Asks whether the person is a resident or nonresident for tax purposes, what is U.S.-source, and what rate applies. Runs independently of the first.

Why this matters

They can disagree. An athlete may be a resident for tax purposes and still have no work authorization; another may be lawfully present and still be taxed as a nonresident at a flat rate with no deductions. Answering one question does not answer the other, and a professional who conflates them will be confidently wrong.

Work authorization comes first

F-1 status carries narrow employment permissions. On-campus work is limited — not more than 20 hours per week while school is in session — and off-campus employment generally requires prior authorization, unavailable in the first academic year and otherwise tied to defined categories with an approved application. Unauthorized employment carries severe consequences, including termination of the SEVIS record.

The difficulty for NIL is structural. Filming a commercial, appearing at a camp, or producing sponsored content is activity, performed somewhere, for compensation — which is what employment rules reach. Whether a given arrangement is authorized is a determination for an immigration attorney and the school’s designated school official on the athlete’s actual record.

Sources USCIS — Students and Employment · USCIS — Policy Manual, Volume 2, Part F, Chapter 6 — Employment · U.S. Immigration and Customs Enforcement (SEVP) — SEVIS — Employment · DHS — Study in the States — Student Employment Overview (SEVIS Help Hub)

Tax residency is a test, not a nationality

For tax, the question is whether the athlete is a resident or nonresident alien — decided by the green-card test or the substantial presence test, a day-counting formula weighting the current and two preceding years. Students in F, J, M or Q status are frequently exempt individuals whose days do not count for a period, which is why many international athletes remain nonresidents for tax years after arriving.

Sources IRS — Determining Alien Tax Status · IRS — Substantial Presence Test · IRS — Publication 519 — U.S. Tax Guide for Aliens · IRS — Foreign Students, Scholars, Teachers, Researchers and Exchange Visitors

Why the rate can be 30% with no deductions

A nonresident’s U.S.-source income that is not effectively connected with a U.S. trade or business — the FDAP category, where royalty treatment for use of identity lands — is generally taxed at a flat 30%, withheld at source, with no deductions available against it. That is a materially different outcome from a domestic athlete filing a Schedule C against expenses, on identical economics.

Sources IRS — Taxation of Nonresident Aliens · IRS — Publication 515 — Withholding of Tax on Nonresident Aliens and Foreign Entities · IRS — Publication 519 — U.S. Tax Guide for Aliens

A treaty may reduce it — but is not relief by itself

Treaty jurisdictions modeled

In our engine's table

No treaty in force

Taxed at the statutory rate

Sitting at the full 30%

At least one of them has a treaty

Whether a treaty reduces the 30%, and to what, depends on the specific article and the characterization of the payment. Two traps sit here. A treaty partner is not automatically a reduced rate. And a treaty that has been signed is not a treaty in force: ratification is a separate step, and the IRS in-force list is the thing to check, not the news.

Claiming a treaty rate is also a paperwork act. It generally requires a Form W-8BEN with a U.S. taxpayer identification number; absent it, the payer withholds the full statutory rate whatever the treaty says.

Sources IRS — United States Income Tax Treaties — A to Z · IRS — Table 1 — Tax Rates on Income Other Than Personal Service Income (Rev. May 2023) · IRS — Publication 901 — U.S. Tax Treaties · IRS — About Form W-8 BEN

Our own working paper. We publish a reconciliation of every treaty rate we apply, traced to the IRS source column and dated, at the treaty verification memo — including the characterization calls where we diverge from the table, and why.

The article that overrides the rate

The classic error. Most treaties contain an athlete and entertainer article under which personal-service income earned in the U.S. may remain taxable at source regardless of the royalty rate. So the threshold question is usually not “what is the treaty rate” but “is this a royalty for identity, or compensation for services performed?” Two deals of the same value can land in different articles. Separately, a federal treaty does not bind the states: a state may tax income the treaty exempts federally.

Sources IRS — Publication 901 — U.S. Tax Treaties · IRS — Publication 519 — U.S. Tax Guide for Aliens

Reference

Every source on this page

31 sources, all primary — the agency, governing body or court speaking for itself. Each was retrieved and checked to resolve on the date shown.

Where this page summarizes a source, the summary is ours and the authority is theirs.

Disclaimer

# SidelineWealth™ — Disclaimer **Operated by CLV Media, LLC · Effective Date: June 24, 2026 · Contact: legal@sidelinewealth.com** ## 1. General 1.1 This Disclaimer governs your use of the SidelineWealth™ platform and all Outputs (the **"Platform"**) and is incorporated into the Terms of Service. By using the Platform, you acknowledge and agree to it. ## 2. Not Legal Advice 2.1 The Platform and Outputs are for general informational and financial-planning-illustration purposes only and **do not constitute legal advice**. No attorney-client relationship is formed. Laws governing NIL, revenue sharing, entity formation, employment classification, and taxation are complex, vary by jurisdiction, and change frequently. ## 3. Not Tax, Accounting, Financial, or Investment Advice 3.1 The Company is **not** a CPA firm, tax-return preparer, registered investment adviser, broker-dealer, or financial planner, and the Platform **does not provide tax, accounting, financial, or investment advice** or recommendations. Outputs (including S-Corporation, QBI/§199A, self-employment-tax, PTET, and multi-state "jock-tax" estimates) are illustrative models, not professional opinions. ## 4. Not a Reimbursement, Savings, or Outcome Guarantee 4.1 The Platform **does not guarantee** any tax savings, refund, effective rate, take-home amount, audit outcome, or other financial result. Estimated savings ranges are hypothetical and depend on facts, assumptions, and future law. Actual results will differ. ## 5. AI-Generated Content Limitations 5.1 Portions of the Platform use artificial intelligence to generate summaries, explanations, and document-intake suggestions, and to triage monitoring-agent candidates. **AI Outputs may be inaccurate, incomplete, outdated, or fabricated ("hallucinated").** Human review of monitoring-agent results, where performed, does not guarantee accuracy. You must independently verify all AI Outputs before relying on them. ## 6. Source Data; Accuracy Not Guaranteed 6.1 Rule, rate, policy, and court data are sourced from publicly available materials published by the IRS, SSA, the Federal Register, state departments of revenue, the federal and state courts, the NCAA, the College Sports Commission, and similar bodies. Such data may be outdated, misinterpreted, or incomplete, and **the Company does not warrant its accuracy, completeness, or timeliness**. Tax and NCAA/NIL rules may change, including retroactively. ## 7. Classification and Eligibility Uncertainty 7.1 The tax classification of NIL and revenue-share income (including 1099 versus W-2 treatment and royalty versus service characterization) is unsettled and subject to litigation and regulatory change. The Platform does not determine NCAA, conference, institutional, state, or clearinghouse eligibility or compliance, and **does not provide immigration or visa/work-authorization advice**. International and visa-holding athletes must consult qualified immigration and tax counsel, and all athletes must consult their institution's compliance office. ## 8. Your Responsibility 8.1 You are **solely responsible** for your own tax, financial, structuring, compensation, filing, eligibility, and compliance decisions, and—if you are an Advisor User—for any advice or report you provide to your clients. You should consult a qualified, licensed CPA, tax attorney, or financial advisor before acting on any Output.