NIL money and your teen
A parent's guide

Do I have to sign my teen's NIL contract?

You should. In New York your teen is a minor until 18, and courts usually let a minor cancel a contract. Your signature does not by itself stop that, but a court can still make your family pay back what is fair for what your teen already got. A photo or ad release you sign is different: your teen usually can't cancel it.

• Your written OK is required. New York law bars using a living person's name or picture to advertise without written consent, and for anyone under 18 that consent comes from a parent or guardian. New York's highest court held in 1983 that a young model could not cancel an unrestricted photo release her parent signed, so limit where photos can be used and for how long.
• Read five parts first: how long it lasts, who else your teen can work with, exactly what your teen has to do, how and when the pay comes, and how either side can end it.
• Get the league rule in writing. Whether a high-school player can take a deal depends on the league, not just the state, and breaking a league rule can cost eligibility. The lesson has a table for NYSPHSAA, PSAL, CHSAA, NJSIAA, PIAA and NEPSAC.
• Agents must be registered with the New York Secretary of State, and your teen can cancel an agent contract within 5 days of signing.

A lawyer should look at anything long, exclusive or worth real money.

The full lesson, with the league rules table and the red flags: Module 02, Understanding NIL Deals →

Does my teen have to file taxes on NIL money?

Yes, once your teen's NIL profit for the year reaches about $434, even if you claim them as a dependent. That is where net earnings from self-employment hit $400, and the IRS says anyone at that level must file their own federal return. The income is your teen's, not yours, even if the brand pays you.

• It is self-employment income. Pay to post, show up or sign autographs, from a brand that does not employ your teen, carries self-employment tax: 15.3% on 92.35% of profit, about 14.1%.
• No tax form does not mean no tax. A Form 1099-NEC is only required at $2,000 or more from one business in 2026. Free gear counts as income at its normal price.
• Income tax is often $0. In 2026 a dependent's standard deduction is the bigger of $1,350 or earned income plus $450, up to $16,100. If NIL pay for work is the only income and profit is under about $17,300, federal income tax is $0 and the only federal tax is self-employment tax.
• Dates. The 2026 return is due April 15, 2027, with a New York return too, plus city tax for New York City residents.

These assume you claim your teen and there are no business costs. The habit the lesson teaches: move about 15% of every NIL payment into savings the day it arrives, more if state tax is owed.

The full lesson, with estimated tax and records: Module 03, NIL and Taxes → Your teen's own numbers: the NIL Tax Calculator.

Can my teen put NIL money in a Roth IRA?

Yes, if it is pay for work. The IRS counts self-employment earnings as compensation for an IRA, and there is no age limit. For 2026 your teen can put in up to $7,500 or what they earned from work, whichever is less. Because your teen is a minor, an adult opens it as a custodial IRA.

• NIL pay for work counts. Posts, appearances, camps and autograph sessions are work. A deal that only pays to use a name or picture, with no work, may not count. Ask a tax professional about that kind.
• "What they earned" is a little less than NIL profit. The IRS counts profit minus the deductible half of self-employment tax. On $3,000 of NIL profit, that is about $2,788.
• You run it until they are adults. The adult controls a custodial IRA until the child reaches the adult age in your state (FINRA). Money for 2026 can go in until April 15, 2027.
• Getting it back out. What your teen puts in can come out at any time with no tax and no penalty, because withdrawals count as contributions first. The growth comes out tax-free only in a qualified withdrawal: after age 59½ and at least 5 years after the first Roth contribution.

To put in that $1,000, your teen needs about $1,076 of NIL profit, because the IRS counts profit minus half of the self-employment tax.

Hypothetical example. 7% is an example rate, not a prediction. Real investments can earn more, earn less, or lose money, and past results do not guarantee future ones. Fees would lower these numbers.

The full lesson: Module 05, Accounts That Build Wealth →

Why does starting at 16 matter so much?

Compound growth: the money earns a return, and then that return earns too. Say $1,000 earns 7% a year. After one year it is $1,070. In year two it earns 7% on $1,070, so it ends the year at $1,144.90. Over decades, that growth on growth does most of the work.

The early starter puts in $6,000 more and ends with about twice as much. Nothing is guaranteed: the SEC says large company stocks as a group have lost money on average about one out of every three years. And NIL money can make a teen a scam target, so run a free background check at Investor.gov on anyone selling an investment.

Hypothetical example. 7% is an example rate, not a prediction, and real returns change from year to year. Fees and taxes would lower these numbers.

The full lesson: Module 04, Make It Grow →

Where should the money live?

It depends on when it is needed. The tax set-aside and an emergency cushion belong in insured savings, where they will not drop in value. Money that will not be touched for many years has time to be invested.

• Savings. FDIC insurance covers $250,000 per depositor, per insured bank, for each ownership category. A payment app is not a bank.
• Custodial brokerage. An adult opens it under your state's UTMA or UGMA law. It is used only for your teen's benefit and becomes theirs at the adult age your state sets.
• SIPC helps if a brokerage firm fails, up to $500,000. It does not cover a drop in the market.

The full lesson: Module 05, Accounts That Build Wealth →

Sources

• New York General Obligations Law sections 1-202 and 3-101; Arts and Cultural Affairs Law section 35.03.
• Shields v. Gross, 58 N.Y.2d 338 (1983); Scott Eden Management v. Kavovit, 149 Misc. 2d 262 (Sup. Ct. 1990).
• New York Civil Rights Law sections 50 and 51.
• New York General Business Law Article 39-E, sections 899-a, 899-c, 899-j and 899-l.
• NYSPHSAA Handbook (Aug. 2025); PSAL eligibility rules; NJSIAA Constitution and Bylaws 2026-27; PIAA Handbook 2026-27; NEPSAC NIL Policy (2023-24).
• IRS, Name, image and likeness (NIL) income, irs.gov (updated Aug. 2026).
• 26 U.S.C. 6041, as amended by Pub. L. 119-21, section 70433 (Form 1099-NEC threshold).
• 26 CFR 1.61-2(d)(1) (compensation paid other than in cash).
• IRS Topic 554, Self-employment tax; 26 U.S.C. 1401, 1402 and 164(f).
• IRS Rev. Proc. 2025-32, sections 4.01 and 4.14 (2026 brackets and standard deductions).
• IRS Publication 501, Table 3 ($400 of self-employment earnings).
• IRS Form 1040-ES (2026), estimated tax rules and due dates.
• 26 U.S.C. 73(a) (a child's earnings are the child's income); 26 U.S.C. 6072(a) (return due date).
• New York State Form IT-201 instructions, who must file.
• IRS Notice 2025-67 (2026 IRA limit, $7,500); IRS Publication 590-A (2025), What Is Compensation?; IRS Publication 560 (2025).
• IRS Publication 590-B (2025), Roth IRAs; 26 U.S.C. 408A(d).
• FINRA, Ways to Invest for Children (June 30, 2026): custodial IRAs; UGMA and UTMA custodial accounts.
• SEC, Investor.gov, Glossary: Compound Interest; What is Risk?; Asset Allocation; Protect Your Money: How to Avoid Investment Scams.
• FDIC, Understanding Deposit Insurance; FDIC Consumer Resource Center, Banking With Third-Party Apps (June 2024).
• SIPC, What SIPC Protects, sipc.org (checked Oct. 2026).