NIL and tax

[Bearkat_Vol]

Great thread, BTW. This is an example of 'good VolNation."

 

[Devo182]

Just wondering…

We have all read of stories about guys going to the NFL, NBA, etc., who have come from backgrounds where there was not much wealth, if any. They get a good amount cash and many, not all, squander it, get in financial trouble, eventually owning the IRS substantial amounts.

With all these high school kids getting a lot of money, it would seem that in the near future we will be hearing many more sad stories about these kids as well. At least the kids who go to college may have slightly more maturity when it comes to these things.

Hopefully most have some legit financial advisor in their corner. If not, what happens when the IRS comes knocking?

UT and other schools have classes and advisors to guide them.

It's really not that hard. Set aside 15% for SE tax (pay quarterly) and effective tax rate for 1099 income taxes.


I also don't know of that many ex-pro players with IRS issues, mostly debt issues. Pros are employees and their bulk income has tax monies withheld. The very famous ones will get NIL money with commercials and such, but I haven't heard of many of them having tax issues.

The concern, if genuine, is nice. But better to make a million and make a whoopsie not paying taxes and owing back-interest and penlaties than....never making a million.

 

[Devo182]

I remember Willie Nelson got in deep tax trouble, had to basically go on the road for 10 years to pay off his IRS debts.

But I'm sure these 18, 19, 20 year old kids will be fine.

Willie was high all the time

 

[Devo182]

I am curious about how the players are paid by spyre-do they take out taxes before they cut a check?

As the players are not employees and basically working for themselves, I would imagine that the 15% penalty still applies?

Basically if a player signs an NIL deal with spyre for $1 million a season (for simplicity).

I would imagine that's about. 37% tax (or more) off the top plus the 15%.

So, do the players get checks tattling $1 million or do they get checks for about $480k after taxes, etc?

If they just get the raw amount, then yes tax troubles will be coming. If Spyre takes it out in advance and reports it, then it would be pretty hard for the players to have irs issues based solely on a Spyre payment?

Does this question make sense?

No, these are 1099s. They are not employees-employers and cannot withhold taxes.

Individuals are responsible for the SE (payroll) taxes and income taxes.

 

[Devo182]

Average Retirement Savings Balance by Age​

Perhaps the most official measure of American retirement savings comes from the Federal Reserve System. The Fed calculated average retirement account balances for individuals as of 2022, the latest year for which figures are available. Broken down by age, those balances are as follows:

AGE	AVERAGE RETIREMENT ACCOUNT BALANCE
Younger than 35	$49,130
35-44	$141,520
45-54	$313,220
55-64	$537,560
65-74	$609,230
75 or older	$462,410

That came from US News and World Report April 22, 2024

Important footnotes:

35-44	$141,520
45-54	$313,220
55-64	$537,560
65-74	$609,230
75 or older	$462,410

Of course, averages can be skewed by those who have large nest eggs, and median numbers are significantly lower, according to the Federal Reserve. For instance, the median savings of those aged 35 to 44 is $45,000. The median is the number at which half the people in a group have saved more and half have saved less.



One also has to wonder - if this is based on the retirement account balances - does this include folks who don't have a retirement account? That would greatly lower the number as well.

The metric I've always heard is double your age if 35 (70k). Triple your age if 40 (120k) Quadruple at 45 (180k). And so on. So if you're 70...630k. Add in SS, own your home, and maybe...

 

[GAVol]

Years ago I watched something regarding NFL pay and how when NFL Players play in states with state Income taxes...they get THAT STATE'S Income tax withheld from that week's check.

Will the same go for NIL payments to kids as they travel for away games in states with personal income tax?

Just wondering here in the off-season...

Don’t see how that could possibly happen.

 

[Devo182]

Years ago I watched something regarding NFL pay and how when NFL Players play in states with state Income taxes...they get THAT STATE'S Income tax withheld from that week's check.

Will the same go for NIL payments to kids as they travel for away games in states with personal income tax?

Just wondering here in the off-season...

No. It is obligatory when they are working in another state. Ie salary, yes even bonuses.

But if NIL work is done in-state, it wouldn't apply.

 

[pimo1]

They're 1099 contractors so nothing is withheld by anyone. They'll pay quarterly taxes, hopefully be incorporated, and as long as they hire good people to help with that and accounting they'll be just fine.

Very important that last part..... being a 1099 contractor at that age is a recipe for disaster. Most are gonna spend the money as soon as the check clears. Youd hope spyre would hook them up with some advisors but they can only do so much if people don't listen or have family members involved.

 

[pimo1]

No. It is obligatory when they are working in another state. Ie salary, yes even bonuses.

But if NIL work is done in-state, it wouldn't apply.

Correct in TN it wouldn't be relevant. Also, I am sure the collective has the pitch in their Deck but, 100k spends a lot better in Knoxville than in 90% of other P4 markets. For instance, the COLA in Knoxville is around 39k in LA its almost 53k plus state tax. In Knoxville, you can live fairly decent with savings with that 100k. In LA you'd be living ok in a worse area with minimal savings. In Tuscaloosa, you'd be the king of your mud hill. Tennesee has the third lowest tax burden on residents behind only Alaska and Wyoming. Michigan, Georgia and Texas are other notables in the top 10 lowest.

 

[J C Higgins]

Nobody, even if salaried and make millions, has to pay FICA tax on more than $168,000

 

[CR-vol]

Very important that last part..... being a 1099 contractor at that age is a recipe for disaster. Most are gonna spend the money as soon as the check clears. Youd hope spyre would hook them up with some advisors but they can only do so much if people don't listen or have family members involved.

I'm not worried about any of them dunno why anyone else would be either. They're grown men welcome to life. Think for a minute have you ever heard Dylan Sampson in an interview? He's maintained a 4.0 gpa. A lot of those players have heads on their shoulders like that. Some of them don't. Don't feel sorry for them if they do it right they'll keep the tax burden to a minimum. If they were on W2's that's when they'd really get screwed and I'd maybe feel bad for them.

 

[pimo1]

I'm not worried about any of them dunno why anyone else would be either. They're grown men welcome to life. Think for a minute have you ever heard Dylan Sampson in an interview? He's maintained a 4.0 gpa. A lot of those players have heads on their shoulders like that. Some of them don't. Don't feel sorry for them if they do it right they'll keep the tax burden to a minimum. If they were on W2's that's when they'd really get screwed and I'd maybe feel bad for them.

They are not grown men. In fact, most of them are way more ill-equipped than the average person their age because of their circumstances. Most of these guys have been never lived 'real life' Even ones that came from disadvantaged backgrounds for the most part are somewhat insulated. They spend a huge amount of their time dedicated to the sport. This means the other things are handled by others or not handled at all. It's not a fault thing it just is how it is. These guys grow up in a bubble for the most part. People treat them differently and do things for them (mostly because they expect favors down the road). The people around them rarely equip them for what is coming because they don't know themselves or want them to depend on them.

Most pros that have been in the game for decades don't know how to manage money... how do you expect a 18-22 year old? Heck you give any kid that age even one that's somewhat grounded and not embedded in a full on ALPHA overload the kind of money these kids have thrown at them and things turn out bad. Honestly how many people here would handle 100k much less millions thrown at them at 18 years old would spend it responsibly and file their taxes every quarter, know how to itemize expenses and budget? Heck how many adults? Its like hitting the lotto.. did you know 70% of lottery winners end up filing bankruptcy in a few years? Throwing that much money at folks not used to it can be bad if you don't also give them the tools for financial literacy.

 

[SayUWantAreVOLution]

They are not grown men. In fact, most of them are way more ill-equipped than the average person their age because of their circumstances. Most of these guys have been never lived 'real life' Even ones that came from disadvantaged backgrounds for the most part are somewhat insulated. They spend a huge amount of their time dedicated to the sport. This means the other things are handled by others or not handled at all. It's not a fault thing it just is how it is. These guys grow up in a bubble for the most part. People treat them differently and do things for them (mostly because they expect favors down the road). The people around them rarely equip them for what is coming because they don't know themselves or want them to depend on them.

Most pros that have been in the game for decades don't know how to manage money... how do you expect a 18-22 year old? Heck you give any kid that age even one that's somewhat grounded and not embedded in a full on ALPHA overload the kind of money these kids have thrown at them and things turn out bad. Honestly how many people here would handle 100k much less millions thrown at them at 18 years old would spend it responsibly and file their taxes every quarter, know how to itemize expenses and budget? Heck how many adults? Its like hitting the lotto.. did you know 70% of lottery winners end up filing bankruptcy in a few years? Throwing that much money at folks not used to it can be bad if you don't also give them the tools for financial literacy.

Nobody is throwing money at anyone. They're earning it and whether they can or can't handle it, they have every right to earn it.

I've known too many Trust Fund kids who wrapped their lives around all kinds of telephone poles as soon as they got their money DESPITE a freaking Ivy League education.

The Kennedy Family is the poster family for rich kids gone wrong and even the successful ones like JFK had the moral compass of a rutting elk.

Still, they're rich for whatever reason and rich doesn't add brain cells, it just buys attorneys to help clean up the mess you made unlike the guy with no money who also lacks intelligence. I'd rather have money and be dumb than just be dumb.

Bottom line: sports is not the only bubble. People who have money and even a bunch of letters after their name are just as dumb as athletes often.

 

[Go aeiou]

you normally only pay income tax in the state where you are domiciled. Pro sports people are different.
Greedy states.