Winning a gold medal brings a $9,000 tax bill

[03EBZ06]

When Olympic medalists return to the United States, they’re in high demand. Everyone, from Michael Phelps to a bronze medalist in judo will be sitting for television interviews, talking to newspapers, going to assemblies at local schools and celebrating with friends, family and young athletes. They’ll also draw some unwanted interest from everyone’s favorite bureaucrats: the IRS.

Medalists will have to pay hefty taxes for standing on the podium in London. It’s not the value of the medal itself that will require a separate line on this years tax returns, it’s the tax on the prize money that comes with a gold, silver or bronze.

The United States Olympic Committee rewards Olympic medalists with honorariums. A gold medal brings $25,000. Silver medals get you $15,000. And a bronze is worth $10,000.

The Weekly Standard, a conservative news magazine, ran the numbers and tabulated that the tax bill on a gold is $8,986, silver is $5,385 and bronze is $3,500.

They note that Missy Franklin, an amateur who has yet to cash in on her fame with endorsements, already owes $14,000 in taxes from her gold and silver medal. By the time the Games are finished, Franklin’s tax bill could reach $30,000.

For rest ---> http://blog.sfgate.com/olympics/2012/08/01/winning-a-gold-medal-brings-a-9000-tax-bill/

 

[JD_KaPow]

Uh, no. The "analysis" assumes that the prizes are taxed entirely at the highest tax rate (35%), which is only true if the Olympian in question has over $388,350 in other taxable income, or a lot more than that in actual income before deductions. Sure, Michael Phelps will pay that rate, but Missy Franklin and most other medalists won't pay anything close to the amounts they claim. What a shoddy piece of work.

 

[DFWJC]

Regardless of tax bracket, it's crazy that someone should ever have to pay tax on a Olympic gold medal.
Now if they sell that medal on the open market...maybe so if they actually report it.

 

[JD_KaPow]

Regardless of tax bracket, it's crazy that someone should ever have to pay tax on a Olympic gold medal.
Now if they sell that medal on the open market...maybe so if they actually report it.

Turns out they don't have to pay taxes on the medal itself (another thing the "study" was wrong about). According to Mark Jones, the communications director for the U.S. Olympic Committee, “There is no ‘value’ to medals and there is no tax associated with it.”

They are subject to taxes on the associated prize money, which is income like any other income (just like lottery prizes are taxed). Of course, they can also deduct all their expenses - travel, coaching fees, equipment, etc. - against that, so I doubt any of them pay much at all in actual taxes on the prize money.

I'm not sure what's "crazy" about prize money being taxed as income, though.

 

[WPBCowboysFan]

I'm not sure what's "crazy" about prize money being taxed as income, though.

Its the principle of it all bro.

Having the government's fingers in anything they can say looks like, smells like, or they say is a pie.

 

[dez_for_prez]

Why don't they just give 14k, 10k and 6.5k and not tax them on it?

 

[ajk23az]

Why don't they just give 14k, 10k and 6.5k and not tax them on it?

It's the government we're talking about...:laugh2:

 

[Jammer]

Taxing achievement. Nothing new here.

 

[JD_KaPow]

Why don't they just give 14k, 10k and 6.5k and not tax them on it?

Because almost all of them get much more than that in the current system?

 

[Rogah]

Regardless of tax bracket, it's crazy that someone should ever have to pay tax on a Olympic gold medal.
Now if they sell that medal on the open market...maybe so if they actually report it.

They're not paying taxes on the medal itself, which is only worth a couple hundred. They're paying taxes on the $25,000 prize reward they receive from the USOC.

If someone wins $25,000, they should pay taxes on that. I don't really see how this is controversial.

 

[Jammer]

If someone wins $25,000, they should pay taxes on that. I don't really see how this is controversial.

Years and years of personal sacrifice to become the best in what you do, and a determination to represent the United States in the best way possible that 99.999 percent of us will never comprehend.

Yep, I can fully understand why we should tax their "winnings". It's the American thing to do. It's wouldn't be fair they would get all this extra money tax free that the rest of us don't get. It's the same thing as someone winning the lottery by correctly picking the right numbers.

 

[Rogah]

Years and years of personal sacrifice to become the best in what you do, and a determination to represent the United States in the best way possible that 99.999 percent of us will never comprehend.

Yep, I can fully understand why we should tax their "winnings". It's the American thing to do. It's wouldn't be fair they would get all this extra money tax free that the rest of us don't get. It's the same thing as someone winning the lottery by correctly picking the right numbers.

Oh, really? So if someone wins, say, a chess championship should that money be tax exempt too? What about someone who wins $50,000 winning at Magic: The Gathering?

If you win a $25,000 prize, you should have to pay taxes on it, period, end of discussion. I don't really care what the circumstances are behind you receiving that $25k. Now, of course, if any of them have eligible deductions for training expenses or whatever, then those are perfectly fair game. But in general, I see no reason why it shouldn't be taxable income.

I guess unlike you, I'm someone who thinks athletes should live by the same rules as all the rest of us. I don't want to afford someone special treatment above the law just because they can run faster than me. And I certainly don't worship them as the godlike figures you see them as.

 

[casmith07]

I wonder if you can disclaim the honorarium.

 

[JD_KaPow]

Years and years of personal sacrifice to become the best in what you do, and a determination to represent the United States in the best way possible that 99.999 percent of us will never comprehend.

Yep, I can fully understand why we should tax their "winnings". It's the American thing to do. It's wouldn't be fair they would get all this extra money tax free that the rest of us don't get. It's the same thing as someone winning the lottery by correctly picking the right numbers.

It's income, like any other income. It seems like a really weird loophole you want added to the tax code. To my mind, the tax code has enough loopholes already.

 

[JD_KaPow]

I wonder if you can disclaim the honorarium.

I can't imagine anyone can force you to take prize money.

 

[Rogah]

I can't imagine anyone can force you to take prize money.

I agree, but I can't imagine anyone would turn down $25,000 just because it means they would have to pay $9,000 of that to Uncle Sam.

 

[The30YardSlant]

First of all, whoever wrote that doesn't understand how tax brackets work. Second, they are being taxed on winnings. No different than paying taxes on winning the lottery or a new car.

 

[jnday]

First of all, whoever wrote that doesn't understand how tax brackets work. Second, they are being taxed on winnings. No different than paying taxes on winning the lottery or a new car.

Except that the money was won in another country. The laws may have changed, but at one time the US couldn't tax money made elsewhere. This would my problem with it.

 

[casmith07]

I agree, but I can't imagine anyone would turn down $25,000 just because it means they would have to pay $9,000 of that to Uncle Sam.

I wouldn't disclaim gold. But maybe the bronze payment since its a drop in the bucket.

But someone mentioned the deductions, etc. makes sense. I think the article misses the mark.

 

[MapleLeaf]

Except that the money was won in another country. The laws may have changed, but at one time the US couldn't tax money made elsewhere. This would my problem with it.

...what are the US tax rules on income paid out by a US corporation for work done in a foreign country?

If you are Canadian you pay taxes on it.