Tracking expenses is critical for collegiate athletes receiving revenue sharing and NIL (Name, Image and Likeness) compensation, especially when operating as independent businesses via a Schedule C on their personal income tax return or as an S corporation. Proper documentation ensures accurate tax filings, maximizes deductions and reduces the risk of costly IRS disputes.
Why Is Expense Tracking So Important?
- Revenue sharing and NIL payments are generally considered self-employment income for athletes, requiring detailed tracking of all related business expenses to offset taxable income
- Rigorous expense tracking is essential for supporting deductions, optimizing tax outcomes and meeting compliance requirements. Missing deductions or failing to separate business and personal costs can lead to overpaying taxes or triggering IRS audits.
- Accurate records make year-end tax preparation more efficient and provide essential documentation in case of an IRS inquiry
What Kinds Of Expenses Are Deductible?
Athletes can deduct "ordinary and necessary" expenses related to their business activities, which could include:
- Travel and lodging: Airfare, hotel stays, car rentals and mileage for promotional events, competitions, public appearances or endorsement work
- Training and coaching: Payments to personal trainers, specialized skill coaches and session fees to maintain or enhance athletic performance
- Equipment and supplies: Sporting equipment, uniforms, shoes and other gear essential for both athletic performance and content creation (e.g., cameras, editing software, lighting kits)
- Marketing and promotions: Social media advertising, website costs, fees for brand development and graphic design services tied to building the athlete’s brand
- Professional services: Agent fees, legal expenses, accounting and tax advisory fees, and NIL platform or app subscription costs
- Home office: Pro-rata share of rent, utilities, office supplies and internet used for business management, communications or branding conducted from a designated workspace
- Vehicle expenses: Mileage, repairs, insurance and depreciation for vehicles used to attend events or travel for business-related activities (excluding commuting to campus)
- Communication costs: The business-use portion of cell phone and internet bills if used for NIL activities or content creation
- Meals and entertainment: Meals directly related to business, such as meetings with agents, brand representatives or content collaborators
- Insurance premiums: Business liability or media insurance purchased to protect NIL income streams
Receipts Or It Didn’t Happen: Best Practices For Documentation
- Maintain digital or physical copies of all receipts, invoices and mileage logs
- Use dedicated business bank accounts and expense-tracking apps to streamline recordkeeping and ensure clear separation of personal and business transactions
- Regularly categorize expenses and keep notes justifying their business relevance in case of IRS inquiries
- Periodically reconcile bank and credit card statements with expense logs to ensure completeness
Schedule C vs. S Corp S
Schedule C filers report deductible expenses directly against NIL and revenue-sharing income, with self-employment tax applied to net earnings.
S corp filers are required to pay themselves a “reasonable salary” as W-2 wages, while the remainder of profits can be passed through and may be subject to different tax treatment. S corp structure can allow for additional fringe benefits and potential payroll tax savings but requires more sophisticated recordkeeping and compliance.
Tracking and documenting these expenses help collegiate athletes fulfill their responsibilities as business owners, maximize allowable tax deductions and avoid unnecessary tax liabilities.
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