Milton Law Group offers boutique tax law and accounting services tailored specifically for the unique tax challenges facing athletes and entertainers.
The intricate nature of income streams for athletes and entertainers, including endorsements, appearance fees, royalties, and more, requires a deep understanding of tax regulations and how they apply to specific industries.
Our team of skilled tax professionals has extensive experience working with high-profile clients, protecting their interests, and ensuring compliance with applicable federal, state, and local tax laws.
By staying abreast of the ever-changing tax laws and regulations, we help athletes and entertainers navigate complexities and identify potential tax-savings opportunities through deductions, credits, and exemptions that apply specifically to their profession.
Our comprehensive range of sports and entertainment legal services includes:
1. Tax Planning and Compliance
Milton Law Group tax attorneys develop customized tax strategies to help optimize finances by minimizing tax liabilities while ensuring compliance with federal, state, and local tax regulations.
2. Name, Image, & Likeness (NIL) Tax Planning
We provide expert guidance on the tax implications of NIL agreements and help structure deals to maximize the athlete’s financial benefits.
3. Estate Planning
We help athletes and entertainers protect their wealth and their family’s future with comprehensive estate planning services tailored to the individual’s needs and objectives.
4. International Taxation
Many athletes and entertainers have income streams outside of the United States, which provides additional compliance and reporting requirements under international tax laws.
Milton Law Group specializes in providing comprehensive tax law services designed specifically for athletes and entertainers facing unique financial challenges to help make informed decisions and optimize tax positions.
Our team of experienced tax attorneys understands the intricacies of these high-profile professions and stays up to date with the ever-changing tax regulations that affect athletes and entertainers.
Our services for athletes and entertainers include:
1. Income Tax Planning
We analyze your diverse income sources, such as endorsement deals, appearance fees, royalties, and performance income, to develop proactive tax strategies.
By leveraging deductions, credits, and exemptions available to you, we aim to optimize your tax position and maximize your after-tax income.
2. Business Entity Formation
As an athlete or entertainer, establishing the right business entity could have significant tax advantages. Our firm guides you through the process of entity selection, whether it’s forming an LLC, S-Corporation, or another structure, taking into account your unique circumstances and long-term goals. An entity also provides liability protection and potential tax advantages.
3. Contract Review and Negotiation
Milton Law Group attorneys provide expert assistance in reviewing and negotiating contracts to ensure favorable tax provisions. By identifying potential tax pitfalls or opportunities within the agreement, we help protect your financial interests and mitigate potential tax risks.
4. Name Image Likeness (NIL) Tax Implications
With the recent changes in college sports regarding NIL, our firm closely monitors the evolving landscape. We advise college athletes on the tax implications of NIL agreements, helping structure deals in a tax-efficient manner while maximizing your financial benefits.
5. Estate Planning
Protecting your wealth and securing your financial legacy is crucial. Our firm specializes in estate planning for athletes and entertainers, taking into account your unique assets, potential income streams, and the needs of your loved ones. We develop comprehensive plans that minimize estate taxes and facilitate a smooth transition for future generations.
6. Tax Controversies and Audits
Milton Law Group has extensive experience representing individuals and small businesses during tax audits by the IRS and state taxing authorities.
By hiring a licensed tax lawyer, the attorney-client privilege allows clients to openly share their concerns upon receiving an audit notice, without fearing that what they say could someday be used against them in a criminal proceeding.
When necessary, we have the ability and experience to challenge the IRS’s proposed audit adjustments before the IRS Office of Appeals, the U.S. Tax Court, and U.S. Federal Courts, and have successfully done so for many clients.
The implementation of the Name, Image, & Likeness (NIL) policy in college sports has had a significant impact on the tax landscape for student-athletes.
The ability for college athletes to profit from their name, image, and likeness presents life-changing financial opportunities, but student-athletes who receive NIL money should be mindful of the related tax consequences and money saving opportunities.
Milton Law Group’s tax attorneys closely follow the rapid NIL developments and provide expert guidance on structuring agreements, tax planning, and compliance to help make the most of these opportunities while staying on the right side of the law.
Considering the complex tax implications of NIL, student athletes should consult with a Milton Law Group tax attorney prior to completing any NIL deal. Our tax professionals can advise on NIL tax considerations, such:
1. Taxable Income and Reporting
Any income derived from the NIL monetization policy is considered taxable.
Student athletes who receive compensation for endorsements, sponsorships, appearances, or other opportunities will need to report these earnings on their tax returns. It is crucial to keep meticulous records of all transactions and income received to ensure accurate reporting.
2. Filing Status and Deductions
Many student athletes are considered dependents of their parents, which can affect their tax liabilities. However, with the potential for substantial income from NIL opportunities, some student athletes may become self-supporting and qualify for independent filing status. There may also be opportunities to deduct money paid out and/or expenses incurred in furtherance of NIL activities (i.e. mileage, fees paid to managers, consultants, and legal/tax professionals).
It is advisable to consult with a tax professional to determine the most advantageous filing status and identify potential deductions, such as business-related expenses, to minimize your tax liabilities.
3. State and Local Taxes (SALT)
State and local taxing authorities generally tax income where it is earned. Thus, student athletes may be liable for state and local taxes in various jurisdictions depending on where you live, work, attend school and/or carry on your NIL activities.
State and local tax, or SALT as it is called in the tax industry, can be an extremely complicated area of tax law, so student athletes profiting from NIL income should get trusted tax advice regarding jurisdictional requirements for filing returns and paying taxes where income was generated.
4. Independent Contractor vs. Employee
Most athletes receive NIL payments as independent contractors, not employees, and will receive Forms 1099-NEC, showing amounts paid to them as non-employee compensation. Taxes will not be withheld and you most likely will owe taxes, so you should prepare for that when you receive the money and before you spend it.
As a non-employee, the IRS considers these athletes self-employed and will impose self-employment tax on top of ordinary income tax.
However, as a self-employed independent contractor, you may deduct your related business expenses, such as vehicle expenses for driving to/from NIL appearances and payments made to service providers like lawyers and tax professionals.
With payments made to others, though, you should track the amounts paid, obtain a W-9 from the recipient, and issue Form 1099s at the end of the year to help bolster the deductibility of the expenses and to avoid penalties.
5. Retirement Savings Opportunities
Being self-employed also allows student athletes to take advantage of tax-favored retirement accounts, such as SEP IRAs and solo 401(k)s, allowing them to put away significant amounts of money pretax.
Consult with a Milton Law Group tax attorney to evaluate which retirement vehicle is recommended based on your individual circumstances.
What should student athletes do to avoid problems with the IRS and state/local taxing authorities?
The IRS and Department of Justice will no doubt closely monitor the rapidly evolving NIL situation and look for opportunities to pursue tax audits and criminal tax prosecutions where student athletes fail to comply with and/or flout their tax reporting and payment obligations.
As a former DOJ Tax Division Trial Attorney, tax attorney Mark Milton knows firsthand the DOJ Tax Division often pursues high-profile criminal tax prosecutions against athletes and other celebrities to garner media attention and deter noncompliance by others similarly situated.
At Milton Law Group, we work closely with athletes and entertainers to develop personalized strategies that align with your financial goals, minimize your tax liability, and ensure compliance with all applicable laws and regulations.
Take control of your financial future. Contact us today to schedule a consultation with Mark Milton and discover how our tailored tax law services can help you navigate the financial complexities athletes and entertainers face.