$1.2M NIL deal at 18.
Most keep $588K. Michael kept $805K.
The $217,000 gap was four decisions wide.
Meet Michael. 18 years old. From California. Never filed a tax return in his life. Just walked into more money than most adults will see in a decade.
Hereโs how we drew it up.
๐ ๐ผ๐๐ฒ ๐ญ: ๐ฆ๐๐ฎ๐๐ฒ ๐ฟ๐ฒ๐๐ถ๐ฑ๐ฒ๐ป๐ฐ๐.
California has a 13.3% top tax rate. Texas has none. NIL income is taxed based on your state of domicile, not your schoolโs state. We established Michael as a Texas domiciliary.
Saved: $127,000.
๐ ๐ผ๐๐ฒ ๐ฎ: ๐๐ป๐๐ถ๐๐ ๐๐ฒ๐น๐ฒ๐ฐ๐๐ถ๐ผ๐ป.
NIL income is self-employment income. As a sole proprietor, Michael would pay self-employment tax on every dollar. We set up an LLC taxed as an S-corp, paid him $190K in salary, and took the rest as distributions.
Lower SE tax. And it unlocked the next move.
๐ ๐ผ๐๐ฒ ๐ฏ: ๐ฅ๐ฒ๐๐ถ๐ฟ๐ฒ๐บ๐ฒ๐ป๐ ๐ฎ๐ฐ๐ฐ๐ผ๐๐ป๐๐.
Remember that $190K salary? It wasnโt random.
It maxed out his solo 401(k): $24,500 employee 25% employer match = $72,000.
Add a backdoor Roth IRA at $7,500.
Tax savings today: ~$26,000. Plus 50 years of compounding.
๐ ๐ผ๐๐ฒ ๐ฐ: ๐๐ฒ๐ฑ๐๐ฐ๐๐ถ๐ผ๐ป๐.
Hereโs the one most athletes never hear:
Off-field NIL income lets you deduct agent fees. On-field salary doesnโt.
Agent fees ($60K ) business expenses ($20K) = $80K off the top.
Four moves. $217K back in his pocket. Now we invest.
If Michael puts $685K to work at age 18 and never adds another dollar, an 8% return gets him here:
Age 30: $1.7M
Age 40: $3.7M
Age 50: $8M
Age 60: $17M
Age 70: $37M
Age 80: $80M
Heโs 18. His superpower isnโt the $1.2M.
Itโs the 60 years of compounding nobody his age understands he has.
What he does in the next 12 months decides whether $1.2M stays $1.2M or becomes $80M.
If youโre on a big NIL deal, letโs talk.