Successful US Olympians face a hero’s welcome – from the IRS

  | The Resume Center

     

Whilst the US may stand atop the medals’ table in Brazil, their successful athletes face quite a hefty tax bill when they come back stateside. American Olympians are subject to the so-called “victory tax” – a tax not only on the money they receive from the US Olympic Committee for winning a medal, but also on the value of the medal itself!

For the Rio Games , a gold medallist will receive US $25,000, with US $15,000 and US $10,000 on offer for those who win silver and bronze. The medals are valued at current commodity prices. Gold medals – which, in reality, are principally composed of silver with gold plating are worth US $600; Silver medals are evaluated at US $300; and a Bronze medal, which is essentially copper, is worth only about US $4.

Under the current rules, Olympic winnings are taxed as income, something from which athletes in many other countries are exempt.

Whether these taxes are reasonable has been debated by policymakers, fans and the athletes themselves for years. In 2012, former presidential hopeful, Marco Rubio introduced a bill to prevent Olympian athletes from the London Games being taxed in such a manner, whilst earlier this year a cross-party bill to stop taxation of Olympians and Para-Olympians passed the Senate. A similar bill has been proposed in the House of Representatives, but has yet to be put to a vote.

The implication for athletes at the top-end of the scale, for multi-medallists such as Michael Phelps and Simone Biles, could be tax bills running to tens of thousands of dollars. Whilst the endorsements and sponsorships they will receive mean this is still a drop in the ocean for them,  spare some sympathy for the less well-known star performers.

Most US athletes pay for their own training and equipment, and receive little or no support from the US Olympic Committee. Winning an Olympic medal takes years of training, sacrifice and hard work for very little financial reward. The “victory tax” effectively penalises then for reaching the top of their sport and being successful.