International Student-Athletes, NIL Income, U.S. Tax Residency, and FIRPTA

Name, image, and likeness opportunities have created valuable income streams for college athletes. Student-athletes may now receive money, merchandise, services, or other benefits for endorsements, social-media promotions, appearances, autograph sessions, camps, merchandise, licensing agreements, and other uses of their personal brands.

For international student-athletes, however, an NIL agreement can create substantially more complicated legal and tax issues than it does for a U.S. citizen. The athlete may need to consider:

• Immigration and employment authorization
• Resident-alien versus nonresident-alien tax status
• U.S.-source versus foreign-source income
• Federal income-tax withholding
• Income-tax treaties
• Self-employment and payroll taxes
• State income-tax filing obligations
• Foreign bank and financial-account reporting
• FIRPTA when the athlete sells U.S. real estate

The most important preliminary rule is:

Permission to receive NIL compensation under NCAA, conference, school, or state rules does not automatically mean an international student-athlete is authorized to perform the activity under U.S. immigration law.

The IRS defines NIL income broadly. A student-athlete has NIL income when the athlete receives monetary or financial gain, including certain noncash benefits, from a transaction involving the use of the athlete's name, image, or likeness.

Common NIL arrangements include:

• Sponsored social-media posts
• Product endorsements
• Personal appearances
• Autograph signings
• Athletic camps and private coaching
• Television or digital advertisements
• Podcasts and video content
• Affiliate-marketing arrangements
• Branded merchandise
• Licensing of photographs or video
• Collectible or trading-card agreements
• Payments from NIL collectives

NIL income is generally taxable even when it is paid in property rather than cash. Free products, gift cards, vehicles, travel, housing, cryptocurrency, or other benefits may constitute income based on their fair market value.

The income does not become tax-free merely because the recipient is a student or uses the proceeds to pay tuition and educational expenses.

Many international student-athletes attend U.S. colleges in F-1 student status. F-1 students have limited authorization to work in the United States.

USCIS states that F-1 students generally may not work off campus during their first academic year. Qualifying off-campus training or employment must fall within an authorized category and generally must be approved before the student begins working.

Potential employment-authorized categories may include:

• Curricular Practical Training
• Optional Practical Training
• A STEM OPT extension
• Employment based on severe economic hardship
• Other limited circumstances authorized under immigration law

CPT must generally be an integral part of the student's curriculum, and OPT must generally be directly related to the student's major area of study.

Many NIL arrangements require active services. Examples include:

• Creating promotional videos
• Posting advertisements
• Attending sponsored events
• Signing autographs
• Participating in commercials
• Coaching or operating camps
• Wearing or displaying products
• Promoting discount codes
• Making public appearances

These activities may constitute employment or self-employment for immigration purposes, even when the athlete does not have a traditional employer.

Before performing an NIL agreement, an international student-athlete should provide the contract and a complete description of the required activities to the school's designated school official. Significant arrangements should also be reviewed by qualified immigration counsel.

Paying income tax on unauthorized employment does not correct the underlying immigration violation.

The type of work an international student-athlete may perform depends on the athlete's immigration classification and the specific employment authorization obtained. Being eligible to compete for a university does not independently authorize employment, self-employment, or NIL activity.

This table provides only a general overview. The athlete must review the actual visa classification, Form I-20 or DS-2019, Employment Authorization Document, petition approval, sponsor authorization, and scope of permitted activities.

F-1 is the visa classification most commonly associated with international students enrolled in U.S. colleges and universities. F-1 status does not provide unrestricted permission to work. The student may work only under a specifically authorized category and within its limitations.

On-Campus Employment

An F-1 student may generally engage in qualifying on-campus employment when the work takes place on the school's premises, is performed for the school, is performed for a commercial business that provides direct services to students on campus, or occurs at an educationally affiliated off-campus location that satisfies the applicable requirements. During the academic term, qualifying on-campus employment is generally limited to 20 hours per week.

An NIL agreement with a private automobile dealership, restaurant, collective, apparel business, or social-media sponsor ordinarily does not become on-campus employment merely because the athlete attends a university.

Curricular Practical Training (CPT)

CPT is authorized training that must be an integral part of an established curriculum. It may include an internship, cooperative-education program, required practicum, or another qualifying work-study arrangement. CPT does not create general permission to participate in unrelated NIL opportunities. Each activity must fall within the actual CPT authorization.

Optional Practical Training (OPT)

OPT allows qualifying F-1 students to obtain temporary employment directly related to their major area of study. Eligible students may receive up to 12 months of OPT, divided between pre-completion and post-completion periods. The work must be directly related to the athlete's degree program. Merely earning money from personal popularity does not necessarily establish that the work is directly related to the major.

STEM OPT

Certain F-1 graduates with qualifying STEM degrees may obtain a 24-month STEM OPT extension. STEM OPT is more restrictive than ordinary post-completion OPT and requires a qualifying employer participating in E-Verify, a bona fide employer-employee relationship, and a completed Form I-983 training plan. Independent NIL activity and self-employment generally present serious obstacles under STEM OPT.

Severe Economic Hardship Employment

An F-1 student who experiences severe economic hardship caused by unforeseen circumstances beyond the student's control may apply for off-campus employment authorization. This authorization should not be interpreted as automatic approval of every NIL contract.

Some international student-athletes enter under J-1 exchange-visitor status. J-1 employment depends on the exchange category, the terms of the approved program, and authorization from the program sponsor. An NIL contract with an outside company is not automatically permitted as J-1 student employment. The athlete should obtain a written determination from the program sponsor before performing services.

J-1 Academic Training

Academic training allows a qualifying J-1 college or university student to participate in training related to the student's field of study. The training must be directly related to the student's major field of study, described in a written offer or training proposal, and authorized in writing by the responsible officer. Ordinary personal-brand deals may not qualify as academic training merely because the athlete gains business experience from them.

M-1 practical training is generally limited to post-completion training related to the course of study, making ordinary NIL activity during enrollment unlikely to qualify. B-1/B-2 visitors and ESTA travelers generally may not perform paid NIL services in the United States. P-1A and O-1A athletes may have broader authorization, but only within the scope of the approved petition — neither classification provides unrestricted NIL work authorization.

Some NIL arrangements are described as passive licensing agreements. A true passive arrangement might involve use of an existing photograph, licensing of a signature or logo, no required appearances, no required promotional posts, and no content-production obligations.

By comparison, an arrangement requiring the athlete to create content, attend events, endorse products, participate in advertisements, or make public appearances involves active services.

The title of the agreement does not control the outcome. Calling a payment a "royalty," "license fee," or "passive NIL payment" does not prevent immigration or tax authorities from examining the athlete's actual obligations.

A non-U.S. citizen is generally classified as either a resident alien or a nonresident alien for federal income-tax purposes. A person is generally a resident alien when the person satisfies either the green-card test or the substantial-presence test. A person who meets neither test is generally a nonresident alien.

Immigration status and tax residency are separate concepts. An athlete can hold a temporary student visa but still become a resident alien for income-tax purposes.

An individual generally satisfies the substantial-presence test when physically present in the United States for at least 31 days during the current year and at least 183 weighted days during the current year and preceding two years. The weighted calculation generally counts all qualifying days in the current year, one-third of qualifying days in the preceding year, and one-sixth of qualifying days in the second preceding year.

Certain days may be excluded. Qualifying students temporarily present under an F, J, M, or Q visa may be considered "exempt individuals" for purposes of counting days. The term exempt individual does not mean that the athlete is exempt from income tax — it generally means that certain days of physical presence are not counted toward the substantial-presence test. A student claiming excluded days may be required to file Form 8843.

International athletes should determine their tax residency every year rather than assuming the prior year's classification continues indefinitely.

A resident alien is generally taxed in the same manner as a U.S. citizen and ordinarily files Form 1040. A resident alien must generally report worldwide income, including U.S. NIL compensation, foreign NIL compensation, athletic compensation, foreign endorsement income, foreign interest and dividends, foreign business income, cryptocurrency transactions, and gains from sales of property.

A resident alien cannot generally avoid U.S. tax merely by having compensation paid to a foreign bank account. The athlete may be eligible for a foreign tax credit when another country taxes the same income, and may also become subject to international information-reporting requirements including possible FBAR and Form 8938 filings.

A nonresident alien generally files Form 1040-NR and is ordinarily taxed more narrowly. Nonresident aliens are generally subject to U.S. tax on income effectively connected with a U.S. trade or business and certain U.S.-source fixed or determinable annual or periodic income.

The source and character of each NIL payment must be determined separately. Income for personal services is generally sourced based on where the services are physically performed. Therefore, a payment from a foreign company can still be U.S.-source income if the athlete creates the content, makes the appearance, or performs the promotional work while physically present in the United States.

An athlete treated as an employee may receive Form W-2. The payer generally withholds federal income tax and applicable employment taxes.

Many NIL participants are treated as independent contractors. A resident athlete operating an NIL activity as a trade or business will commonly report the gross income and allowable expenses on Schedule C. IRS Schedule C instructions expressly address NIL income received by student-athletes.

A qualifying independent-contractor business may deduct ordinary and necessary expenses, including properly documented agent commissions, management fees, legal fees, accounting and tax-preparation fees, photography and video-production expenses, website expenses, advertising costs, payment-processing charges, business supplies, qualified travel costs, and other expenses directly connected with earning NIL income.

Personal expenses do not become deductible merely because the athlete maintains a public image. Personal clothing, grooming, housing, tuition, everyday meals, and ordinary living expenses will generally remain nondeductible unless a specific tax rule provides otherwise.

A nonresident athlete may receive Form 1042-S rather than Form 1099. The correct form depends on the athlete's tax status, the type of income, applicable withholding rules, and possible treaty benefits. A nonresident alien should not automatically be treated as a domestic independent contractor merely because the athlete provides services.

Payments to nonresident aliens are subject to special federal withholding rules. Depending on the income classification, a payer may be required to withhold tax at a statutory rate unless the income is effectively connected and appropriately documented, a treaty exemption or reduced rate applies, a specific statutory exception applies, or the recipient provides the appropriate withholding documentation.

Common forms include:

• Form W-8BEN — certifies foreign status and claims certain treaty benefits on qualifying passive income, including some royalty payments
• Form 8233 — used by certain nonresident aliens to claim a treaty exemption from withholding on qualifying compensation for dependent or independent personal services
• Form W-4 — generally applies when the athlete is properly classified as an employee

Providing a tax form to the payer does not establish that the underlying services are authorized under immigration law.

The United States has income-tax treaties with numerous countries. A treaty may modify the taxation of students and trainees, employees, independent contractors, athletes and entertainers, royalties, scholarships, interest, and other income.

Treaty provisions differ significantly by country. A student article may include a time limitation, a maximum dollar amount, a requirement that the individual be present primarily for education, restrictions on the type of compensation covered, or separate treatment for athletic or entertainment income.

A treaty provision for scholarships does not automatically exempt NIL income. Similarly, a student provision may not apply when the compensation is covered by a separate athlete or entertainer article.

Treaty eligibility should never be assumed based only on citizenship. The athlete must confirm that an applicable treaty exists, that the athlete was a qualifying resident of the treaty country, that the relevant income article applies, that all time and dollar limitations are satisfied, that the proper withholding form is submitted, and that any required treaty-based disclosure is filed.

Athletic scholarships and NIL payments are separate categories. A scholarship may be excludable to the extent it is used for qualified tuition and required fees, books, supplies, and equipment, subject to applicable tax rules. Amounts used for room, board, travel, optional equipment, or personal expenses may be taxable.

NIL compensation is generally received in exchange for licensing personal rights or performing services. The income does not become a tax-free scholarship merely because the athlete is enrolled in college or uses the proceeds for education.

The application of Social Security, Medicare, and self-employment taxes depends on whether the athlete is an employee or independent contractor, whether the athlete is a resident or nonresident alien, the athlete's visa status, whether the work is authorized and consistent with the visa, whether an exception applies, and whether a totalization agreement affects the result.

Certain qualifying nonresident students in F-1, J-1, M-1, or Q-1 status may be exempt from Social Security and Medicare taxes on authorized employment performed consistently with the purpose of the visa. That exemption does not necessarily exempt the income from federal income tax. Once the athlete becomes a resident alien, the payroll-tax or self-employment-tax analysis may change.

International student-athletes may have filing obligations in several states. A state may claim the right to tax the athlete because the athlete is a resident or domiciliary, the university is located in the state, promotional services were performed there, an appearance or autograph session occurred there, a commercial was filmed there, the athlete conducted a camp there, or the NIL income is otherwise connected with the state.

State residency does not necessarily follow federal tax residency or immigration status. International athletes should maintain a calendar identifying where each compensated service was physically performed.

The following example uses the name Edubray Ramos solely to demonstrate the difference between resident-alien and nonresident-alien taxation. It does not represent or claim to describe any real individual's immigration status, tax residency, income, investments, real-estate holdings, or tax returns.

Assume Edubray is an international athlete temporarily living in the United States. During the year, he receives:

Assume Edubray remains a nonresident alien because he does not satisfy the green-card or substantial-presence test after accounting for any qualifying excluded days. He would generally file Form 1040-NR.

U.S. Athletic-Service Income: The $80,000 earned for athletic services physically performed in the United States would generally be U.S.-source income, potentially treated as income effectively connected with a U.S. trade or business and taxed at graduated rates.

U.S. Endorsement and Social-Media Income: The $40,000 earned for promotional services performed in the United States would also generally be U.S.-source income — even if a foreign company made the payment, the payment was deposited outside the United States, the agreement called the compensation a royalty, or the athlete was paid through a third party. The place where the athlete physically performed the services is a central sourcing consideration.

U.S. Royalty: The $20,000 payment for the use of Edubray's image in the United States may constitute U.S.-source royalty income if it is a genuine license rather than compensation for services. U.S.-source royalty income received by a nonresident alien may be subject to gross-basis withholding unless effectively connected treatment or a treaty provision applies.

Venezuelan Endorsement Income: Assume Edubray performs all services connected with the $25,000 endorsement while physically present in Venezuela. As a nonresident alien, that foreign-source service income would generally not be subject to U.S. federal income tax unless it is effectively connected with a U.S. trade or business or another special rule applies.

Venezuelan Bank Interest: The $2,000 of interest from a Venezuelan bank would generally be foreign-source income. A nonresident alien would generally not include the foreign bank interest on Form 1040-NR unless an exception or effectively connected income rule applies.

Now assume Edubray satisfies the substantial-presence test and no exception or treaty position allows him to remain a nonresident alien. He would generally file Form 1040 and report worldwide income, including all U.S. income, the $25,000 Venezuelan endorsement income, and the $2,000 Venezuelan bank interest.

Edubray may be entitled to a foreign tax credit if Venezuela taxes the endorsement income. He may also have FBAR or Form 8938 obligations based on his foreign accounts and financial assets.

The Foreign Investment in Real Property Tax Act (FIRPTA) is not an NIL tax. It applies when a foreign person disposes of a U.S. real property interest. The IRS states that the disposition of a U.S. real property interest by a foreign person is subject to FIRPTA income-tax withholding.

A U.S. real property interest may include a house, condominium, vacant land, commercial real estate, certain leasehold interests, certain options to purchase real estate, certain interests in domestic corporations holding substantial U.S. real property, and certain personal property associated with real-estate use.

FIRPTA generally serves two purposes: it subjects a foreign person's gain from U.S. real estate to U.S. tax, and it requires withholding as a mechanism for collecting the potential tax. The buyer or other transferee generally bears responsibility for withholding and reporting the applicable amount.

Assume Edubray purchased an Arizona condominium for $350,000 and later sold it while classified as a nonresident alien.

FIRPTA withholding is generally based on the gross amount realized rather than the seller's taxable gain. Edubray's economic gain is $100,000, but the withholding mechanism may be applied to the $500,000 amount realized. The withheld amount is generally not the final tax — it operates as a tax payment or credit.

Edubray would generally receive documentation of the FIRPTA withholding, file Form 1040-NR, report the actual gain, calculate the federal tax due, and claim the amount withheld as a payment. If FIRPTA withholding exceeds the final tax liability, Edubray may claim a refund after filing the return.

Reduced FIRPTA Withholding: A foreign seller may request a withholding certificate when the otherwise required withholding would exceed the anticipated maximum tax liability. The IRS may issue a certificate allowing reduced withholding when the statutory requirements are satisfied. Form 8288-B is used for certain withholding-certificate applications. The application should be addressed well before or in coordination with closing.

Assume Edubray sells the same Arizona condominium after becoming a resident alien. A resident alien is generally treated as a U.S. person for income-tax purposes. Edubray would ordinarily provide the buyer or closing agent with an appropriate certification of nonforeign status, and FIRPTA withholding would generally not apply if the certification is valid.

Edubray would still report the property sale on Form 1040 and calculate gain under the ordinary federal tax rules. If the condominium was his principal residence, he may qualify for some or all of the IRC § 121 principal-residence exclusion if he satisfies the applicable ownership, use, timing, and other requirements.

A closing agent should not determine FIRPTA status solely from nationality, visa classification, U.S. mailing address, driver's license, length of property ownership, or prior-year tax documents. An athlete may hold an F-1 visa but be a resident alien for tax purposes. Another athlete may have lived in the United States for several years but remain a nonresident alien because qualifying days are excluded.

Tax residency must therefore be determined for the year and date of the transaction.

Accepting NIL work without immigration review. An athlete may sign a contract and begin performing services before confirming employment authorization.

Assuming NCAA permission equals immigration authorization. Athletic eligibility rules and federal immigration law are separate systems.

Filing the wrong federal return. An athlete may file Form 1040 when Form 1040-NR is required, or continue filing Form 1040-NR after becoming a resident alien.

Failing to file Form 8843. A student may exclude days for the substantial-presence test but fail to submit the required informational form.

Treating all NIL payments as royalties. Compensation for appearances, promotional posts, videos, coaching, and endorsements generally cannot be converted into passive royalty income merely through contract terminology.

Ignoring noncash compensation. Free merchandise, gift cards, travel, vehicles, housing, and cryptocurrency may constitute taxable income.

Failing to report foreign income after becoming a resident. A resident alien generally must report worldwide income, including amounts deposited into foreign accounts.

Missing state returns. An athlete may earn taxable income in multiple states through appearances, competitions, filming, camps, and promotions.

Failing to make estimated payments. Independent-contractor NIL payments may be made without sufficient federal or state withholding.

Missing FIRPTA at closing. A nonresident athlete may sell U.S. real estate without recognizing the buyer's withholding obligation until the transaction is ready to close.

Before accepting or performing a significant NIL arrangement, an international student-athlete should:

1. Provide the proposed agreement to the school's designated school official
2. Obtain immigration advice regarding employment authorization
3. Determine federal tax residency for the calendar year
4. Calculate and document days of U.S. presence
5. File Form 8843 when required
6. Classify each payment as wages, service income, business income, royalties, scholarships, prizes, or another category
7. Identify where each service was physically performed
8. Separate licensing income from active-service compensation
9. Review the applicable income-tax treaty
10. Provide the proper withholding certificate to the payer
11. Confirm whether the payer should issue Form W-2, Form 1099, or Form 1042-S
12. Estimate federal and state tax obligations
13. Make estimated-tax payments when necessary
14. Track every state in which compensated activities occur
15. Review foreign-account and foreign-asset reporting obligations
16. Determine FIRPTA status before selling U.S. real estate
17. Maintain all contracts, receipts, travel records, and closing documents
18. Reevaluate tax residency every year

• IRC § 871 — Tax on nonresident alien individuals
• IRC § 1441 — Withholding of tax on nonresident aliens
• IRC § 1445 — FIRPTA withholding on dispositions of U.S. real property interests
• IRC § 7701(b) — Resident and nonresident alien definitions; substantial-presence test
• IRC § 121 — Principal-residence exclusion
• Treas. Reg. § 1.871-1 — Classification of nonresident alien individuals
• Treas. Reg. § 1.1445-1 — FIRPTA withholding rules
• Form 1040-NR — U.S. Nonresident Alien Income Tax Return
• Form 8843 — Statement for Exempt Individuals and Individuals with a Medical Condition
• Form W-8BEN — Certificate of Foreign Status of Beneficial Owner
• Form 8233 — Exemption from Withholding on Compensation for Independent Personal Services
• Form 1042-S — Foreign Person's U.S. Source Income Subject to Withholding
• Form 8288-B — Application for Withholding Certificate for Dispositions by Foreign Persons
• IRS Publication 519 — U.S. Tax Guide for Aliens
• IRS Publication 515 — Withholding of Tax on Nonresident Aliens and Foreign Entities
• IRS Schedule C Instructions — NIL income guidance for student-athletes
• USCIS — F-1 student employment regulations; CPT, OPT, and STEM OPT guidance

This article provides general educational information and does not constitute individualized tax, legal, immigration, investment, or financial advice. The treatment of an NIL arrangement depends on the athlete's immigration status, tax residency, home country, applicable treaty, contract terms, location of services, income classification, state connections, and other specific facts. Consult a qualified tax professional and immigration counsel before signing major NIL agreements or completing significant financial transactions.