Tax Guidance For Foreign Student-Athletes In U.S. College Sports

Foreign collegiate-athletes playing in the U.S. face special tax considerations. Typically on F‑1 or J‑1 visas, these athletes are treated as nonresident aliens for U.S. tax purposes and face both immigration and tax issues when earning NIL (Name, Image and Likeness) or revenue sharing income.

Let’s look at some of the risks — and how to mitigate them — for foreign collegiate-athletes.

Visa and Immigration Risks

Students with F-1 visas are only allowed to work in narrow circumstances, such as on campus jobs, certain hardship situations and authorized practical training (CPT/OPT) directly tied to their degree program.

NIL activities, such as endorsements, social media posts, appearances and camps are not automatically authorized under F‑1 rules and may be viewed as unauthorized employment if they constitute “work” for compensation.

If a foreign athlete is paid for services such as autograph signings, appearances and coaching, United States Citizenship and Immigration Services (USCIS) may treat this as employment, which requires prior authorization and must be tied to the student’s field of study. 

Violating F‑1 work rules can result in loss of status, denial of future visas and potential bars on reentry, making it critical to follow these rules.

Tax Classification of NIL/Revenue Sharing Income

NIL and revenue sharing income can be classified in different ways for tax purposes, which affects both U.S. tax and immigration treatment.

Personal services income (self-employment)

• Payments for appearances, social media posts, camps, coaching or other active services are treated as self‑employment income
• This is subject to U.S. federal income tax and, if effectively connected with a U.S. trade or business, may be subject to self‑employment tax (15.3% on net earnings up to the FICA wage base, plus 2.9% Medicare tax on excess)
• For nonresidents, this income is taxed at graduated rates on a Form 1040‑NR, not at a flat 30%

• Payments strictly for the use of the athlete’s name, image and likeness, such as video game royalties, jersey sales and trademarks, may be treated as royalties, which are generally passive income
• Royalties are not subject to self‑employment tax but are still taxable as U.S. source income
• If the athlete materially participates in creating the product — such as designing the jersey or filming content — the IRS may re-characterize the income as active/self‑employment income

Revenue sharing payments from schools

• Direct payments from schools under the NCAA revenue sharing model (post‑House v. NCAA) are likely treated as compensation for services, not scholarships
• These payments are taxable income to the athlete and may be reported on a Form 1099‑MISC or 1099‑NEC (or W‑2 if the athlete is treated as an employee)
• For foreign athletes, this is U.S. source income and subject to U.S. tax, but the classification (wages vs. non‑employee compensation) affects withholding and reporting 

Cost of Attendance (COA) Payments

• Nonresident students can exclude from income the part of scholarships/COA that pays for “qualified” expenses: tuition, mandatory fees and required books/supplies as defined in IRC 117
• Any COA/athletic aid used for non-qualified costs such as room, board, stipends, travel or other personal expenses is taxable scholarship or fellowship income to a nonresident alien, unless reduced or exempted by an income tax treaty
• U.S. source taxable scholarship amounts paid to nonresident aliens are generally subject to federal withholding at 30%, but this is reduced to 14% for F-1 visa students where the taxable amount is incident to a qualified scholarship and may be further reduced by treaty

What counts as “unauthorized employment”?

• Immigration authorities draw a hard line between “passive” income (permitted) and “active” work (prohibited without authorization)
• Active work includes social media promotions filmed in the U.S., paid appearances, autograph signings, running a training camp or clinic, or operating a NIL driven side business from a dorm room
• Even activities styled as “volunteering” or “royalties” can be re characterized as employment if the athlete is actually performing services for compensation

The “royalty income” and passive NIL idea

• Some schools and collectives have tried to treat payments as passive royalties for licensing NIL rights, reported on Form 1099 MISC, to avoid triggering employment rules
• Immigration counsel consistently caution that DHS will look at substance over form: if the athlete must do anything promotional in the U.S., the income is likely active, not passive
• Truly passive arrangements, such as being in a group jersey or video game licensing pool where the athlete does nothing but sign a license once, are viewed as lower risk but still not expressly sanctioned by formal DHS guidance
• The House settlement and future revenue sharing models create an additional problem: those payments look even more like compensation for services as an athlete than NIL royalties
• Treating revenue sharing as “royalties” to sidestep F-1 employment restrictions is widely flagged by immigration practitioners as legally fragile

U.S. Tax Withholding and Reporting

Withholding rules

U.S. payers, including brands, collectives and schools, must report NIL and revenue sharing payments to the IRS and may be required to withhold tax.

If the payment is U.S. source income and not effectively connected with a U.S. trade or business, the default withholding rate is 30% on the gross amount, unless reduced by a tax treaty.

For effectively connected income (e.g., self‑employment income), the payer may not withhold at 30%, but the athlete must still file a return and pay tax based on net income.

Tax treaty benefits

Many countries have tax treaties with the U.S. that reduce or eliminate tax on athletes’ income, often under an “Artistes and Athletes” article.

For example, under the U.S./Spain treaty, income from athletic performances in the U.S. is exempt if gross receipts are equal to or less than $10,000; above $10,000, it is taxable in the U.S.

To claim treaty benefits, the athlete must provide a valid Form 8233 (for services) or Form W‑8BEN (for royalties) to the payer.

Filing requirements

Nonresident athletes must file Form 1040‑NR if they have U.S. source income subject to tax, even if no tax is due (e.g., due to a treaty exemption).

They must also file Form 8843 to document their nonresident status, even if they have no U.S. income.

State and local tax rules vary; some states tax NIL income and may require separate filings.

Performing the work entirely abroad

Concept: services performed entirely abroad

F-1 regulations are enforced based on activity on U.S. soil; if the athlete is outside the U.S., U.S. “unauthorized employment” rules generally do not apply to what they do overseas.

Several university and law firm guides explicitly note that NIL work (filming content, signing contracts, doing appearances) carried out entirely during trips abroad or in the athlete’s home country is generally not an immigration concern, even if the payer is a U.S. company.

How “overseas NIL” structures are being used

Examples of “overseas NIL” structures include:

• Doing photo/video shoots or promotional events during foreign tours, holiday breaks, or time at home, with the contract specifying that all services are performed outside the U.S.
• Signing sponsorship deals in the home country, where the athlete produces and posts content while abroad and is paid for those foreign performed services

Note that some schools’ FAQs now say, in substance, “active NIL arrangements outside the U.S. are generally not a concern for immigration, as long as all actions take place abroad and you keep documentation.”

Important caveats and risks

Performing work abroad does not “turn off” U.S. tax rules. U.S. source vs. foreign source income and the athlete’s tax residence still need analysis on the tax side.

Immigration risk comes into play if any part of the services actually occurs in the U.S. (e.g., routine posting from campus, local appearances, creating content in the dorm), even if the contract says, “performed abroad.”

Schools are being advised not to design or arrange “workarounds” that are obviously pretextual, because DHS looks at substance over form and could view that as facilitating unauthorized employment.

Key Takeaways for Collegiate Athletes

Foreign student athletes now stand at the center of college sports’ economic shift, but their ability to participate in NIL and revenue sharing remains tightly constrained by F-1 visa rules that were never designed for entrepreneurial athletes.

While U.S. tax law allows them to be paid and imposes reporting and withholding obligations, immigration law still treats most U.S. based NIL and revenue sharing as unauthorized employment that can jeopardize status, future work options and even the right to remain in the country.

Until federal agencies squarely address this conflict, the most prudent course for international athletes and athletic departments is to treat NIL and direct pay with extreme caution, structure only truly passive or offshore arrangements where appropriate, and coordinate closely with both tax and immigration counsel before any money changes hands.

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