Win an Olympic Medal, Pay the IRS

What better way for the U.S. government to "thank" our Olympic athletes for all the years of hard work, enormous efforts, and many personal and financial sacrifices in pursuit of excellence than to compel them to pay taxes on their Olympic medals and prize money?  Yes, my fellow Americans, U.S. Olympians must pay income taxes on both the medals and the prize money granted for gold, silver, and bronze.

Besides the actual gold, silver, and bronze medals awarded for the top three Olympians in each event, prizes are also awarded.  For the London Olympics, athletes receive $25,000 for gold, $15,000 for silver, and $10,000 for bronze.

According to the IRS, American medalists must report as income not only their prize money, but also the market value of the actual metal in each medal they win.  As Americans for Tax Reform explains, based on current commodity prices, a gold medal is worth approximately $675, a silver medal is worth about $385, and a bronze medal is worth under $5.  With a top income rate of 35%, here's how much U.S. Olympic medal winners will have to pay in federal income taxes to the IRS, and that's before additional state income taxes may also be due:

Medal

Medal Tax

Prize Tax

Total Federal Tax

Gold

$236

$8,750

$8,986

Silver

$135

$5,250

$5,385

Bronze

$2

$3,500

$3,502

U.S. gold medal winners will owe the IRS up to $8,986 in taxes. Silver medal winners will owe up to $5,385.  Bronze medal winners will owe up to $3,502.  Granted, not all American Olympians will be taxed at the highest rate, but for many who earn other income, this is certainly a strong possibility.  And if they are residents of a U.S. state that has an income tax, these hardworking athletes will have to pay even more income taxes on their prizes. 

California, for example, has a marginal tax rate of 9.3%.  This means that an Olympian from California will face an even more outrageous tax bill.  In addition to the federal taxes they would owe, the gold medal winners will have to pay another $2,387 in California income taxes.  Silver medal winners will pay $1,407.  Bronze medal winners will pay $930. 

To add insult to injury, the IRS' insidious tax policies put American athletes at a further disadvantage.

Not only do our Olympic athletes have to pay taxes on their medals and prizes - chances are their competitors on the field will face no such taxation when they get home. Because the U.S. is virtually the only developed nation that taxes "worldwide" income earned overseas by its taxpayers, our Olympic athletes face a competitive disadvantage that has nothing to do with sports.

Chris Banescu regularly blogs at www.chrisbanescu.com and www.orthodoxnet.com/blog.

What better way for the U.S. government to "thank" our Olympic athletes for all the years of hard work, enormous efforts, and many personal and financial sacrifices in pursuit of excellence than to compel them to pay taxes on their Olympic medals and prize money?  Yes, my fellow Americans, U.S. Olympians must pay income taxes on both the medals and the prize money granted for gold, silver, and bronze.

Besides the actual gold, silver, and bronze medals awarded for the top three Olympians in each event, prizes are also awarded.  For the London Olympics, athletes receive $25,000 for gold, $15,000 for silver, and $10,000 for bronze.

According to the IRS, American medalists must report as income not only their prize money, but also the market value of the actual metal in each medal they win.  As Americans for Tax Reform explains, based on current commodity prices, a gold medal is worth approximately $675, a silver medal is worth about $385, and a bronze medal is worth under $5.  With a top income rate of 35%, here's how much U.S. Olympic medal winners will have to pay in federal income taxes to the IRS, and that's before additional state income taxes may also be due:

Medal

Medal Tax

Prize Tax

Total Federal Tax

Gold

$236

$8,750

$8,986

Silver

$135

$5,250

$5,385

Bronze

$2

$3,500

$3,502

U.S. gold medal winners will owe the IRS up to $8,986 in taxes. Silver medal winners will owe up to $5,385.  Bronze medal winners will owe up to $3,502.  Granted, not all American Olympians will be taxed at the highest rate, but for many who earn other income, this is certainly a strong possibility.  And if they are residents of a U.S. state that has an income tax, these hardworking athletes will have to pay even more income taxes on their prizes. 

California, for example, has a marginal tax rate of 9.3%.  This means that an Olympian from California will face an even more outrageous tax bill.  In addition to the federal taxes they would owe, the gold medal winners will have to pay another $2,387 in California income taxes.  Silver medal winners will pay $1,407.  Bronze medal winners will pay $930. 

To add insult to injury, the IRS' insidious tax policies put American athletes at a further disadvantage.

Not only do our Olympic athletes have to pay taxes on their medals and prizes - chances are their competitors on the field will face no such taxation when they get home. Because the U.S. is virtually the only developed nation that taxes "worldwide" income earned overseas by its taxpayers, our Olympic athletes face a competitive disadvantage that has nothing to do with sports.

Chris Banescu regularly blogs at www.chrisbanescu.com and www.orthodoxnet.com/blog.

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