Thursday, August 2, 2012

The Taxman Cometh...Even to the Olympics

"I owe how much?"
Athletes across the country grow up dreaming of one day bringing home  an Olympic medal. Unfortunately for those who do, Olympic glory comes with a price: a bill from Uncle Sam. 

Any of our athletes who win a medal will also  receive a cash prize from the U.S. Olympic Organizing Committee, and some sports have additional prizes, and the IRS expects to get their cut. Even the medals themselves could incur a tax bill.

Americans for Tax Reform calculated what the taxes would be for Olympic medal winners:

American medalists face a top income tax rate of 35 percent. Under U.S. tax law, they must add the value of their Olympic medals and prizes to their taxable income. It is therefore easy to calculate the tax bite on Olympic glory. 
At today’s commodity prices, the value of a gold medal is about $675.  A silver medal is worth about $385 while a bronze medal is worth under $5. 
There are also prizes that accompany each medal:  $25,000 for gold, $15,000 for silver, and $10,000 for bronze.
So how much will U.S. Olympic medal winners have to pay in taxes to the IRS?
...American gold medal winners will pay the IRS up to $8,986. Silver medal winners will pay up to $5,385. Bronze medal winners will pay up to $3,502.
Just to pile on, American athletes might also owe additional taxes to the British, as Reuters reports:

The fact that the Olympics are taking place in the U.K. means that any income earned in London could be taxed by the British government.  As is customary with the games, British authorities have agreed to waive tax claims on the medal wins. Money a U.S. athlete might earn on the side while across the pond — say, by attending events with a key sponsor — would be taxable by the British, Knight says.
U.S. citizens would get a credit for any British taxes paid against their federal taxes, but with the UK’s highest marginal tax rate of 40 percent exceeding the U.S.’s 35 percent, top athletes could end up paying higher taxes than usual on those earnings.
Maybe we need to update Ronald Reagan's famous quotes about government's view of the economy - "if it moves, tax it" - to "if it swims, runs, jumps, or flips, tax it."

See also: Weekly Standard Blog | Go for the Gold! (Pay the IRS.) "Even by the standards of our government, the numbers are insane."

1 comment:

  1. Any athletes who win in foreign competition gets taxed by the Feds. Had they listened to the tax legal advice attorney, they will know that US based competition taxes low compared to intl ones. US Open attracts more locals that way.


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