Iowa Congressman Randy Feenstra says many college athletes aren’t prepared for the financial reality that comes with earning “Name, Image and Likeness” money.
“This 18-year-old kid who has played sports all his life probably doesn’t know a lot about business,” Feenstra said, “and now is in line to be their own independent contractor.”
Three of Feenstra’s children were scholarship players on college teams in the NAIA and Feenstra said now some NAIA athletes are earning NIL money. Many college athletes, according to Feenstra, don’t understand what expenses they can deduct when filing their taxes. “They can deduct marketing materials, they can deduct professional websites, agents/legal fees — it goes on and on,” Feenstra said. “No one’s telling these kids this stuff.”
Feenstra made his comments this week during a U.S. House hearing focused on reviewing federal tax policy for what the committee’s chair called “the multi-billion dollar industry of college sports.” Feenstra spoke with Thad Madden, a former Internal Revenue Service Officer who has become a tax consultant to college athletes who’ve gotten NIL payments. “One of the misconceptions in the NIL world by both athletes and administrators is that scholarships are tax-free. That’s only partially true,” Madden said, and Feenstra responded: “That’s right,” before Madden continued: “The tuition and any related fees and expenses is tax exempt, but room and board — which all of them are receiving — is fully taxable as ordinary income.”
Madden told Feenstra the NIL collectives he’s had experience with don’t seem interested in ensuring the athletes understand their finances and it’s up to the universities to provide that financial literacy.
(Reporting by Carson Schubert, KSOU, Sioux Center)