Taxes for minors with 1099 income

Yes, you owe taxes. Here's how it works.

When a brand pays you $600 or more in a calendar year, they'll send you a Form 1099-NEC in January. This is your income tax summary — keep it.

The two taxes you owe

1. Federal income tax — based on total earnings; starts around 10% for most young athletes.

2. Self-employment tax — 15.3% on every dollar of NIL income. This one catches people off guard.

Combined, a rough-cut rule is to set aside 25-30% of every NIL payment for taxes. That's why module 1 said "40% taxes" — the extra buffer is your safety net.

What counts as a business expense

You can deduct legitimate costs of your NIL activity, reducing what you owe:

• Equipment used for deliverables (camera, lighting)
• Travel directly for NIL work (not game travel)
• A percentage of your phone/internet bill if used for deliverables
• Coaching/training paid by you (not the team)

Track every expense with receipts. A simple Google Sheet is fine.

Filing the return

You (or your parent) will file a Schedule C along with your federal return. If it's more than ~$400 of self-employment income, you legally MUST file. Consider hiring a CPA for your first year ($200-$500) — worth it.