Olympic-Size Taxes for American Medalists
Published on August 14, 2012
Winning a medal at the Olympics doesn’t only come with eternal glory; it also comes with a hefty price to pay to the Internal Revenue Service. All medaling United States Olympians are taxed on the value of their medal and prize money upon their return home by the IRS.
By all accounts, our Olympians are going to be hit with a hefty tax burden. As of the closing ceremonies on Sunday night, the IRS is currently looking to acquire about $14,829 in medal taxes and about $656,250 in medaling prize money taxes for the 104 medals US Olympians gained in London.
All prize money is subject to a 35% income tax. To break this down a bit further:
• For gold medalists, $8,750 of the $25,000 prize is owed.
• For silver medalists, $5,250 of the $15,000 prize is owed.
• For bronze medalists, $3,500 of the $10,000 prize money is owed to the IRS.
Regarding the tax due on the value of their medals, gold medal winners will pay $236 in taxes on the $650 medal, silver winner will pay $135 on the $385 medal, and bronze winners will pay about $2 on the $5 medal.
That brings the total tax burden on gold medalists up to $8,986, silver medalists up to $5,385, and bronze medalists up to $3,502.
However, don’t feel too terrible for them just yet. When we look deeper into the riches earned by winning Olympians in popular sports, such as swimming and gymnastics, we see that the endorsement deals will make these tax burdens look like chump change in the end. Gabby Douglas, winner of the gold medal for the Women’s All-Around Gymnastics, could earn $8-12 million dollars in endorsements over the next four years. Ryan Lochte, winner of several Men’s Swimming medals, has already surpassed the million-dollar mark for endorsement paydays thanks to Speedo, Gatorade, and AT&T.
The financial burden for those not earning endorsement deals, though, may still mean financial hardship. Lawmakers across the country are lobbying to have a bill passed that will allow Olympians to file their winnings as an exemption. Will the bill pass? It seems too soon to know for sure, so only time will tell.
But one thing is for certain, precious metals continue to be considered a taxable investment by the IRS. Whether you are a United States Olympian or a precious metals investor with a self-directed retirement plan, precious metals will continue to be on the IRS’s radar for years to come.
To read more about the information found in this blog, check out articles from Huffington Post, Americans for Tax Reform, and Money Morning.Back to Blog