Win the Gold and a Big Tax BillTax Professionals' Resource
February 14, 2014 — 1,703 views
It may come as a surprise that American Olympians will be taxed if they place and receive a medal. The U.S. Taxes any income that is earned abroad and this includes the winnings at the Olympic Games. The U.S. Olympic committee awards bonuses to the medal winners which are valued at $25,000 for gold, $15,000 for silver and $10,000 for bronze. In fact, an athlete in the top tax bracket could pay as much as 39.6%, or $9,900, for a gold medal!
Some U.S. Olympians will be able to offset the taxes with deductions. Depending on how the athlete treats their expenses of the sport, they will be able to deduct some of them. For example, equipment, training, and travel can possibly be used as deductions against income.
The U.S. is one of the few countries that taxes prized Olympians, and this has caused some discussion in Congress. Representative Blake Farenthold (R-Texas) reintroduced the Tax Exemptions for American Medalists (TEAM Act) that would exempt the U.S. Olympic athletes from paying taxes on any medals and/or bonuses they win. The Team Act was introduced and referred to committee on February 4, 2014 with a minimal chance of getting past committee. A similar item was supported during the 2012 presidential campaign, but it never reached the president’s desk.
Farenthold’s bill, which is co-sponsored by Reps. Walter Jones and Pete Sessions says, “Gross income shall not include the value of any medal awarded in, or any prize money received from the United States Olympic Committee on account of, competition in the Olympic Games.”