Uncle Sam and the IRS just can’t leave it alone. While the world, was marveling at the accomplishments of our American athletes, our government was calculating just how far they could dig into the pockets of their accomplishments. Yep, that’s right. There’s a tax consequence for winning a medal at the olympics. And its a big one.
Take Michael Phelps, for example. He has won 23 gold medals — 28 medals altogether. And with those medals come prize money — $25,000 per gold, $15,000 per silver, and $10,000 per bronze, making his prize money total $640,000.
Phelps was taxed not only on that but the value by weight of the medals themselves — adding an additional $13,887 to his already impressive total.
The amount each athlete is taxed varies by tax bracket, but someone whose income places them in a higher tax bracket, like Phelps, could see a tax rate as high as 39.6% — or $257,631. Athletes in the lower brackets could still owe 15% or more.
What does that translate to for each medal? Well, at the maximum 39.6% tax rate an athlete would owe…
- $9,900 for winning a gold medal.
- $5,940 for winning a silver medal.
- $3,960 for taking home a bronze.
And if you thought it was just Democrats supporting this thievery, you would be wrong.
Athletes can offset those taxes by claiming deductions for the expense of training and competition. For example, swimmer Missy Franklin’s parents noted at the 2012 Olympics that she spent up to $100,000 per year on training and equipment.
But new federal legislation could end the need to do that. According to the Washington Post:
The Senate passed a bill in July to do just that. It was sponsored by Sen. John Thune (R-S.D.) and cosponsored by Sen. Chuck Schumer (D-N.Y.).
Fortune.com notes there is/has been some pushback, however it never seems to make much progress.
In July, the U.S. Senate passed South Dakota Sen. John Thune’s Appreciation for Olympians and Paralympians Act. A similar bill was introduced by Sen. Marco Rubio in 2012. A House version of the measure sponsored by Texas Republican Blake Farenthold remains under review with the Ways and Means committee.
“We’re hoping to make a push for this when we come back to session, but there’s no floor schedule yet,” Farenthold’s communications director Elizabeth Peace tells Fortune.
… Training and expense costs are tax deductible for Olympians but most Olympic competitors spend years working regular jobs or going to school while enduring grueling practice sessions that push bodies to their breaking points.
Research conducted by the U.S. Track and Field Association in 2012 found that half of the nation’s top 10 track athletes earn less than $15,000 a year from their sport and most outside the top 10 get little to no money at all for competing, CNN Moneyreports.
Yet their work every four years generates millions of dollars for marketers and TV networks across the globe, bringing them fleeting fame, but rarely fortune, as they honor their native land and achieve athletic excellence.