Taxes in America are pay-as-you-go. Employees never notice because withholding comes out of every paycheck, but nobody withholds anything from a collective payment or a brand deal. When your NIL income gets big enough, the IRS expects you to send money in yourself during the year, not just at filing time.
Why the IRS wants NIL money four times a year
The rule is simple: if you expect to owe $1,000 or more in tax for the year after any withholding, you are supposed to make estimated tax payments. For a college athlete with no job withholding, that threshold arrives fast. Roughly speaking, once your net NIL profit clears a few thousand dollars, self-employment tax alone can push you past $1,000 owed.
Miss the payments and the IRS charges an underpayment penalty, calculated like interest on each installment you were late on. The penalty applies even if you pay every dollar you owe by the April filing deadline, which is the part that surprises people most.
The four deadlines around your season
Estimated payments go in with Form 1040-ES, four times a year: April 15, June 15, September 15, and January 15 of the following year. Notice the rhythm is not a clean every-three-months, the second one lands just two months after the first. For a football or basketball athlete whose collective money peaks in-season, that means the payment covering your biggest earning months may come due while checks are still rolling in, so set the money aside as it arrives rather than hunting for it at the deadline.
Each payment is roughly a quarter of your expected total tax for the year: federal income tax plus the 15.3% self-employment tax. Most states with an income tax run a parallel estimated payment system with similar dates, so check your state too.
Safe harbor for a first big NIL year
The IRS gives you two ways to be penalty-proof. Pay in at least 90% of what you actually owe for this year, or pay in 100% of the total tax shown on last year's return (110% at higher income levels). That second option, the prior-year safe harbor, is a gift for athletes whose income just exploded: if you owed little or nothing last year as a student, matching last year's small number protects you from penalties this year, even if your NIL income turned out huge. You will still owe the balance in April, so keep setting aside 25% to 30% of every payment.
If your first real NIL money arrived mid-year, you do not owe estimates for quarters before you had income; the annualized method on Form 2210 matches payments to when the money actually came in. The habit that makes all of this painless: a separate tax savings account, funded on the day each deal pays out.