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Tom O\u2019Saben<\/p>\nDenzel Luna remembers being surprised when learning he had to pay taxes on five pairs of sneakers he received from Nike while playing basketball for the University of Bridgeport.<\/p>\n
Denzel Luna remembers being surprised when learning he had to pay taxes on five pairs of sneakers he received from Nike while playing basketball for the University of Bridgeport.<\/p>\n
That\u2019s because, in July 2021, the National Collegiate Athletic Association (NCAA) allowed college athletes to get endorsements and sponsorships through name, image and likeness (NIL) deals. Four years later, in June, a federal court approved a landmark NCAA settlement allowing colleges to begin paying players through revenue-sharing programs starting July 1, 2025, with initial school caps set at approximately $20.5 million per year.<\/p>\n
As a result, college athletes are earning money \u2014 in some cases millions of dollars \u2014 for playing college sports, but they must pay quarterly taxes on their earnings as 1099 independent contractors.<\/p>\n
While working at local volunteer income tax assistance clinics, Luna \u2014 who graduated in May with an accounting degree \u2014 realized that athletes needed help preparing their taxes.<\/p>\n
Assisted by several classmates, Luna, who grew up in Orlando but now lives in Milford, created an app that guides athletes step-by-step on tax preparation, and in September 2024, Nexa Tax was born.<\/p>\n
\u201cSeeing how complex it was for me, I started to realize how NIL income could be really challenging for these athletes, given that they\u2019re not given these resources,\u201d he told the Hartford Business Journal.<\/p>\n
The app allows athletes to prepare quarterly state and federal taxes by uploading their 1099s and other tax-related documents through a step-by-step checklist. The athletes may then file the taxes through an outside tax preparer or April Tax Solutions, a third-party AI-powered tax filing and preparation platform that is getting integrated into the Nexa Tax app.<\/p>\n
Nexa has offered its app free to 200 college athletes nationwide during beta testing, but it plans to introduce monthly subscription fees of $9.99, $29.99 and $99 starting in January.<\/p>\n
\u201cOur goal is to reach 5,000 paid users by the end of 2026,\u201d Luna said.
\nCapital raising
\nNexa Tax\u2019s startup team includes three technicians \u2014 each holding a 1.5% stake in the company \u2014 along with a head of creative and marketing, and a head of finance and research. Luna said they work part-time for Nexa, but are expected to assume full-time roles after a first seed funding round is completed.<\/p>\n
Nexa Tax plans to open a headquarters in Westport at some point, as the business grows and hires more employees. For now, Luna and his staff work remotely and occasionally hold meetings at the University of Bridgeport\u2019s Bauer Hall Student Entrepreneur Center.<\/p>\n
The fledgling startup is working off $15,000 of Luna\u2019s own savings, and $10,000 in funding contributed by the University of Bridgeport, Luna said.<\/p>\n
\u201cI\u2019ve been bootstrapping (Nexa) until we get launched,\u201d he said.<\/p>\n
Luna said he\u2019s currently working to complete an initial $600,000 seed round and is in talks with Connecticut Innovations and several angel investors regarding funding. Nexa hopes to raise as much as $4 million in a second seed round that will start after next year\u2019s tax season, he said.<\/p>\n
It will also compete with other Westport-area startups for a $25,000 prize in Startup Westport\u2019s Nov. 20 Pitch competition. Nexa Tax was one of 21 contestants chosen out of 77 applicants to participate in the event.<\/p>\n
\u201cWe look forward to working with all of the applicants to further the development of their respective businesses, including Nexa Tax,\u201d Startup Westport co-founder Chris Sirlin said.
\nName recognition
\nIn the meantime, the company is working to build its brand.<\/p>\n
Nexa Tax is working with numerous NIL agencies \u2014 E4 Brand Management, Elevate Sports Management, Officiating Agency, Athlete Creator Lab and WSE Management \u2014 that guide college athletes through the complexities of name, image and likeness deals, as well as universities across the country to let college athletes know about the app.<\/p>\n
Nexa plans to launch a 2.0 version of its app next year, featuring a sleeker, more personalized user interface. The updated app will integrate AI and include portals for financial and legal advising, as well as tools for linking bank accounts and other services.<\/p>\n
It also plans to debut a web-based version of the app for athletes who want to access Nexa through a computer.<\/p>\n
\u201cThere are so many other things we can get into, but we want to make a name for ourselves on this tax app and really build out every feature, and then hopefully get into the other items,\u201d he said.<\/p>\n
Nexa Tax may one day provide tax preparation services for influencers, entertainers and musicians, but it\u2019s focusing on NIL college athletes for now, Luna said.<\/p>\n
The company is targeting a growing customer base.<\/p>\n
Luna said about half of the 540,000 college athletes in the U.S. are making anywhere from $200 to millions of dollars off of endorsement and sponsorship deals. For example, Texas Longhorns quarterback Arch Manning has earned $6.5 million in NIL deals, according to Sports Illustrated.<\/p>\n
The NIL market is expected to reach $2.75 billion in 2025, up 22% from last year, according to Opendorse\u2019s annual report.<\/p>\n
\u201cWe want to get to the point where we get to 10% of the NIL market, which is roughly 25,000 to 30,000 athletes,\u201d Luna said.<\/p>\n
Tom O\u2019Saben<\/p>\n
Nexa Tax can be a great help to money-earning college athletes who need guidance in preparing and filing their tax returns, said Tom O\u2019Saben, the director of tax content and government relations at the National Association of Tax Professionals.<\/p>\n
\u201cThe moment a student-athlete earns a dollar through NIL, they step into the world of self-employment, and the IRS expects them to play by the same rules as any other entrepreneur,\u201d he said. \u201cIt\u2019s exciting, but it comes with responsibility. Keeping good records and understanding your tax obligations early can save a lot of heartache down the road.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Denzel Luna remembers being surprised when learning he had to pay taxes on five pairs of sneakers he…\n","protected":false},"author":2,"featured_media":74191,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[68],"tags":[402,398,400,401,99],"class_list":{"0":"post-74190","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-ncaa-basketball","8":"tag-basketball","9":"tag-ncaa","10":"tag-ncaa-basketball","11":"tag-ncaabasketball","12":"tag-sports"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/74190","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=74190"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/74190\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/74191"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=74190"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=74190"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=74190"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}