Society

U.S. Olympians Have To Pay Tax On The Value Of Medals

| by Kathryn Schroeder
Michael Phelps and fellow OlympiansMichael Phelps and fellow Olympians

Olympic athletes from the U.S. not only have to pay tax on the prize money they receive for winning, but also on the value of their medals.

For a gold medal, an Olympian receives an award of $25,000 from the U.S. Olympic Committee, CNN Money notes. A silver medal has an award of $15,000 and $10,000 is received for a bronze.

An Olympian is required to pay state and federal taxes on the total prize money they collect, including the worth of their medals.

A gold medal is actually made mostly of silver and has a value of about $564. A silver medal is worth about $305, and a bronze, which is mostly made of copper, has a negligible value and is not taxed.

Considering how the U.S. is one of the only countries that does not provide government funding to its Olympians, the added tax burden placed upon them increases the difficult position many are already in financially.

If an athlete is lucky, they will be offered a lucrative endorsement deal. The remainder of Olympians must rely on the small stipend they receive from the USOC, support from local businesses or work a day job to supplement their income.

An Olympians' stipend may be as little as $400 a month, according to Wired.

The average cost an Olympian spends per year on expenses is as low as $18,000 for a gymnast, and between $150,000 to $500,000 per year for a tennis player, research by Wired shows.

Pending legislation in Congress would change the tax burden placed upon Olympians.

The U.S. Appreciation for Olympians and Paralympians Act, which passed the Senate on July 12, would "exclude from gross income, for income tax purposes, the value of any medal or prize money received on account of competition in the Olympic Games or Paralympic Games," according to the Library of Congress.

The House of Representatives is reviewing the bill.

If the bill passes, it would apply to earnings from January 1, 2016 to January 1, 2021, CNN Money reports.

Dr. Steven Gill, a tax professor at San Diego State University, does not think a tax break is going to really help Olympians in the long-term.

"When I think about why these prizes exist, it's to compete with state-supported athletes from other countries," he said. "Cutting taxes isn't going to fix the fact that these athletes don't get paid enough -- it's a short-term fix."

Sources: CNN Money, WiredLibrary of Congress / Photo Credit: Fernando Frazao/Agencia Brasil via Flickr

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