Legislation to Exempt US Olympic Medalists from Tax Comes Out Right on Cue
by Ken Berry on
When Sage Kotsenburg of the United States clinched the country’s first gold medal in the Winter Olympics in Sochi earlier this week, the laid-back snowboarder repeatedly used the word “stoked” to describe his emotions. It’s doubtful that income taxes ever crossed his mind.
But maybe they should have. As with other prize and award recipients –- such as a champion on Jeopardy or a winner on The Price Is Right –- Kotsenburg will be taxed on the value of his swag. For an Olympic gold medalist, the commemorative metal itself is worth $566, while a silver medal is valued at $325, and a bronze at only $3. Not too bad from an income tax perspective.
But the US Olympic Committee also hands out bonuses to winning athletes. For instance, a gold medal results in a $25,000 stipend, the winner of a silver medal reaps a reward of $15,000, and a bronze medalist pulls in $10,000. Depending on the athlete’s top tax bracket, the tax can be as high as $9,900 (39.6 percent of $25,000) for taking home the gold.
It seems that someone in Congress objects to these tax implications whenever the Olympics roll around. Shortly before competition in Sochi got underway, Representative Blake Farenthold (R-TX) reintroduced legislation providing tax exemptions to American athletes who win medals in the Olympics. Farenthold initially proposed this measure, the Tax Exemptions for American Medalists (TEAM) Act, back in 2012 when the Summer Olympics in London was unfolding.
Under the TEAM bill (HR 3987), our nation’s athletes would be exempted from tax on the medals plus any awards or compensation realized for competing on behalf of the US Olympic team, including the bonuses awarded to the top three finishers in an event. The bill has garnered support from some sports enthusiasts.
“This needless tax illustrates how complicated and burdensome our tax code has become,” said Farenthold in a prepared statement. “We need a fairer system for all, and eliminating this unnecessary tax burden on our athletes is a good way to start. Our Olympic athletes are the true embodiment of the American spirit. As they represent our nation on the world stage in the upcoming Winter Olympics, they should be faced with our undying support—not with excessive taxes.”
Wait, there's more!
There's always more at AccountingWEB. We're an active community of financial professionals and journalists who strive to bring you valuable content every day. If you'd like, let us know your interests and we'll send you a few articles every week either in taxation, practice excellence, or just our most popular stories from that week. It's free to sign up and to be a part of our community.
Premium content is currently locked
2 weeks 2 days ago by mucar1990