Nothing is greater than the feeling of triumph and the hoisting of a shiny medal at the Olympic Games. On the other hand, nothing is more disappointing to know that Uncle Sam is peering over your shoulder in anticipation of your tax payment to the IRS after you return home from such a glorious experience.
There are 230 U.S. Olympic athletes convening on Sochi, Russia over the next few weeks for the 2014 Winter Olympics. From bobsledding to snowboarding, each competitor is striving to earn a medal, ideally a gold one. In addition to taking home this hardware, top-performing Olympians are also compensated by the U.S. Olympic Committee (USOC) based on the number of medals they receive. The committee awards prizes of $25,000 for each gold medal, $15,000 to winners of silver medals, and $10,000 to those who earn bronze medals. Because these earnings are considered a form of income, they are subject to IRS income tax requirements, even though this money is technically earned abroad.
How Much Do Olympians Really Owe In Taxes?
According to current U.S. tax law, medalists must report both these monetary winnings in the form of an honorarium and the value of each medal won on their personal tax returns. The current tax rate for these earnings is set at 35%. Gold medals are valued at roughly $675, silver medals are worth about $380, and bronze medals go for just under $5. As such, an American who wins a gold medal at the 2014 Winter Games in Sochi must pay $8,986 in taxes to the IRS. Silver medalists will owe $5,385, and bronze winners are on the hook for $3,502 to go straight into Uncle Sam’s pocket.
A Push To Eliminate These Tax Implications
As a general comparison, paying taxes on winnings from the Olympic Games is essentially like paying taxes on winnings and prizes won by contestants on The Price Is Right or Who Wants To Be A Millionaire? Because of this, the government has introduced some legislation to put an end to requiring Olympic winners to pay taxes on their winnings. In 2012, Congressional leaders formulated two bills – the Tax Exemptions for American Medalists Act and the Olympic Tax Elimination Act. These bills were designed to exempt certain medal winners from paying taxes on their winnings at the Olympics. While these proposed acts failed to pass back then, there has been another recent push with the current Olympic competition to reintroduce similar legislation. Indiana Congressman Luke Messer and other government leaders argue that Olympians are basically being penalized by the IRS for their hard work and high-ranking physical performances among the best athletes in the world.
While we’ll all be rooting for the red, white, and blue to capture as many medals as possible in Sochi, the reality is that these medals and winnings will come with IRS tax responsibilities that are expected to remain in place until the government and the USOC agree to loosen these tax rules. This means an Olympic medal and check will continue to come with a hefty IRS tax bill.
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