Do NFL players get paid through an LLC for tax advantages?

So does that mean they're still paying the same tax rate on their actual NFL salary? I always thought the whole LLC thing was a major loophole, but sounds like it only applies to the side hustle money?

Yes, they still pay the same tax rate on their NFL salary - no way around that since it's W-2 employee income. The highest-paid players are definitely in the top federal income tax bracket (37% currently). The LLC or S-Corp structure mainly benefits their non-salary income. It's not really a "loophole" but rather a legal business structure that can provide advantages when used appropriately. For players with major endorsement deals (think Patrick Mahomes with State Farm or Tom Brady with his numerous partnerships), having that business structure can definitely result in tax savings and better asset protection. But the benefits really depend on their individual situation and how much non-salary income they generate.

Does it actually help with the specific sports industry rules? Athletes have weird tax situations with playing in different states and stuff. Can it handle those complexities or is it more generic business advice?

I'm skeptical about tax AI tools. How does it stay updated with tax laws that change constantly? Especially something as specific as athlete compensation which seems like a niche area.

It actually has specific modules for professional athletes, including the multi-state tax issues which is huge for players who have to file in every state they play games in. It breaks down the "jock tax" calculations and helps track how many duty days were spent in each jurisdiction. The system is continuously updated with new tax rulings and legislation. In our case, it caught a recent change in how certain training expenses are treated for pro athletes that our previous accountant had missed entirely. The documentation feature also helps organize everything by state which is a nightmare to do manually.

Wait, how does this even work? I thought it was literally impossible to get through to the IRS. My accountant told me they answer like 1 out of 50 calls.

Sorry but this sounds like BS. Nobody can magically get through to the IRS when millions of people are calling. What are they doing, bribing someone at the call center?

It's basically a system that automates the calling process. They use technology that continually calls the IRS and navigates through all the phone prompts, then holds your place in line so you don't have to sit there listening to hold music for hours. When they reach a human agent, you get a call back and connect right away. They absolutely don't bribe anyone - it's completely legitimate. They're just using technology to overcome the ridiculous wait times. Think of it like having a dedicated assistant whose only job is to keep calling and waiting on hold for you. During tax season when wait times can be 3+ hours, this service is absolutely worth it.

This is super helpful info, thanks! Quick follow-up - do most players have both an LLC and an S-Corp, or is it typically one or the other? And are there specific thresholds where it makes sense to set these up? Like, would it be worth it for someone making $50K in endorsements vs someone making millions?

Most often we use an S-Corporation rather than just an LLC. While an LLC provides liability protection, having it taxed as an S-Corp allows players to take a reasonable salary and then receive the remaining profits as distributions, which aren't subject to self-employment tax. This can save significant money. As for thresholds, I generally don't recommend going through the setup and compliance costs unless the endorsement/side income is at least $75,000-100,000 annually. Below that, the accounting and legal fees often outweigh the tax benefits. For a player making just $50K in endorsements, the setup and ongoing compliance costs might eat up most of the tax savings. But for those making $250K+ outside their NFL salary, the structure becomes increasingly valuable. The benefits scale up dramatically for those making millions from endorsements.

In my experience, TurboTax Business or H&R Block Premium & Business can handle basic LLC situations, but they struggle with the multi-state issues athletes face. If he's playing pro and traveling to different states, I'd strongly recommend working with an accountant who specializes in athlete taxation at least for the first year to get everything set up correctly.

Tax software is NOT the way to go for pro athletes, even minor leaguers. My son plays MiLB and we tried using software the first year - ended up amending because it missed so many state-specific deductions. Get a sports-focused CPA - expensive but worth it.

This is really helpful! I'm completely new to understanding how professional athlete taxes work. When you mention the multi-state tax obligations, does that mean NFL players have to file tax returns in every state where they play games? That sounds incredibly complicated - like if they play road games in 8 different states, they need 8+ different state returns? And does the LLC structure help with that at all or make it more complex?

Yes, you've got it exactly right - NFL players typically have to file tax returns in every state where they play games, which can easily be 8-12+ states per season. It's called the "jock tax" and it's based on "duty days" - basically how many days they spent working in each state. The LLC structure doesn't really simplify the multi-state filing requirements for their NFL salary since that's still W-2 income that gets allocated based on where games were played. However, it can actually make things slightly more complex because now you have business income that might also need to be allocated across states depending on where endorsement activities or appearances took place. The good news is that most states have reciprocal agreements or you get credits for taxes paid to other states, so you're not actually getting double-taxed. But the paperwork burden is real - this is why most pro athletes end up working with specialized CPAs who have software specifically designed to handle these multi-state allocations. Trying to do this manually or with basic tax software would be a nightmare!

Great questions! For the multi-state business licensing issue, it really depends on the nature of the endorsement work and how much activity happens in each state. Many states have thresholds for when out-of-state businesses need to register - for example, California requires registration if you're doing regular business there, but a one-off commercial shoot might not trigger the requirement. However, this is definitely something that needs to be evaluated case-by-case with legal counsel. As for the timing and dissolution question, you're absolutely right that NFL careers are relatively short (average is only about 3-4 years). What I typically see is players keeping the LLC structure active even after retirement if they transition into coaching, broadcasting, business ventures, or continue to have licensing income from their playing days (like jersey sales or video game appearances). The ongoing compliance costs are usually manageable if there's any business activity. However, if endorsement income truly dries up and there are no other business activities, it often makes sense to dissolve the entity to avoid the annual filing fees and compliance burden. The key is having a good exit strategy planned rather than just letting it sit dormant, which can create unnecessary tax and legal complications down the road.

You're absolutely right about the NIL situation being similar! College athletes with significant endorsement deals can definitely benefit from LLC structures, though the thresholds are usually lower since their compliance costs are simpler (no multi-state professional sports complications). I've seen college athletes set up LLCs when their NIL income hits around $25-50k annually - much lower than the $75-100k threshold for pros. The main benefits are still business expense deductions (agent fees, travel to appearances, marketing costs) and liability protection. Plus, it helps establish good business practices early if they're planning a professional career. The key difference is that college athletes usually have more localized endorsement activities, so the multi-state tax nightmare isn't as much of an issue. A college quarterback doing deals with local car dealerships and restaurants can often manage with a simple single-member LLC in their home state. But you hit the nail on the head - it's really about legitimate business organization rather than tax avoidance schemes. Setting up proper structures early, whether in college or as a pro, helps build good financial habits that serve these athletes well throughout their careers and beyond.