Olympic Tax

From the Desk of Michael T. McCormick

Olympic Tax

As the games of the 31st Olympics in Rio wind to a close, social media has been abuzz over whether athletes must pay tax on the medals they win. Surprise, Surprise! The answer is yes! Internal Revenue Code section 74 specifically requires that athletes pay income tax on prize winnings! Back in the day, when I fantasized about climbing the podium to accept my gold medal, I would have never imagined that when I got home; Uncle Sam would have his hand out, but indeed, that is the case. The Olympic medals and the corresponding prize winnings are considered income and thus subject to tax. Gold medal winners collect $25,000 for each medal, silver medalists get $15,000 and bronze medalists receive $10,000 all subject to US income tax. Theoretically, the values of the medals themselves are even taxed, although the gold medals do not actually have that much gold in them so that aspect of the win is not too painful from a tax standpoint.

On the good side, for any of you Olympic athletes that may need my tax advice…all of the money that goes into training for your sport is deductible to offset the winnings. As most Olympians know, the money they receive in prize winnings is usually offset tenfold by the expense incurred to get to the podium. The travel, the meals, the training fees etc. are all very costly, but deductible against winnings. However, the big paycheck you get to be on the Wheaties box may be tough to shelter! Now, I need to get back to NBC’s wall-to-wall coverage of the hammer throw!