Wednesday, August 17, 2016

If You Win A Medal At The Olympics, The Tax Authorities Will Be After You

How Much Are Olympians Taxed on Their Medals?

An athlete can train for his or her entire life for an opportunity to compete in the Olympic Games, but victory is never assured. The only guarantee? If you do win, the U.S. government is going to want a piece of the action.
In the eyes of the Internal Revenue Service, medal winners are no different from lotto prize recipients or someone who hits a jackpot in Vegas. The prize is considered income, and income gets taxed. But it’s not really the actual medal that has to be reported, it’s the money awarded by the United States Olympic Committee.
In recognition of representing the United States with a victory, the USOC gifts gold medalists with $25,000; $15,000 for silver; and $10,000 for bronze. According to CNBC, that’s the amount that gets earmarked for review by Uncle Sam, with the rate depending on the sum total of the athlete’s total income. For someone who makes out with endorsement deals and rings up a six- or seven-figure annual salary, the tax rate could be as high as 39.6 percent. For most athletes, the scale might fall closer to the 15 percent range for earnings collected abroad. For a gold medal, taxes could range from $3750 to $9900.
A good accountant can probably find a way to deduct training expenses, reducing an athlete’s net income. Senator Marco Rubio tried to pass a bill in 2012 exempting Olympians from the IRS celebrating with them, but it failed to gain any traction. A similar bill passed the Senate in July and will be circulating in the House of Representatives next month. If it passes, it would be retroactive—this year’s winners would be able to keep all of their money.

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