How the S-Corp tax savings work for NIL athletes
A college athlete earning active-service NIL income (reported on a 1099-NEC) pays the full 15.3% self-employment tax on every dollar of profit as a sole proprietor. Electing S-Corporation status splits that income into a reasonable W-2 salary and a distribution — and the distribution portion escapes self-employment tax entirely. On top of that, the §199A QBI deduction can trim federal income tax. Together, those two levers are what this calculator quantifies, net of the roughly $1,500–$3,000 a year it costs to run payroll and file the return.
When an S-Corp is (and isn't) worth it
The savings only materialize above a certain income — usually around $80,000–$120,000 of active-service income, where the FICA savings clear the running cost. Below that, a sole proprietorship keeps more. And it does nothing for royalty income (1099-MISC), which carries no self-employment tax to begin with. For a complete plan — multi-state allocation, retirement, PTET, and a defensible salary — build the full picture in the SidelineWealth planner.