As we all sit back in our easy chair to enjoy the summer Olympics, Uncle Sam is getting ready to rake in the taxes. That’s right, each Olympian is awarded a cash payout in addition to the medal. Well, the Internal Revenue Service treats all the winnings the same way they do our paychecks, by taxing it as income. The cash is considered “earned income abroad” equal to $25,000 for gold, $15,000 for silver and $10,000 for bronze plus the value of the medal itself.
For some time, tax reform groups have argued that this taxation of an Olympian’s winnings was not fair. In fact there have been several attempts to get legislation passed that would make these winnings tax exempt. U.S. Senator Charles E. Schumer sponsored legislation stating, “Our Olympian and Paralympic athletes should be worried about breaking world records, not breaking the bank when they earn a medal.” Those opposed to the legislation argue that this would be unfair to the rest of America. They feel that a tax break says that the government feels that Olympic success is more important than other U.S. workers. They also make the case that Nobel & Pulitzer prize winners (as well as lottery winners) still have to pay taxes on their winnings.
Back in 2012 during the London Olympics, a bill requested tax exemption was introduced to Congress but never made it to the Senate floor. It seems that 2016 may be the year for Olympians. A similar bill entitled United States Appreciation for Olympians and Paralympians Act would exempt U.S. medalists from being forced to pay taxes on their winnings and medals. The Senate passed the bill in July, urging the House of Representatives to do the same when they come back in September. The U.S. Olympic Committee lends support saying, “this bill could assist many athletes as they train to compete for the United States.”
While we wait for the House to return in September to make their final decision, what do you think? When American Olympians bring home the gold, should we just congratulate them? Or should they be expected to pay taxes just like the rest of us? I mean, “what’s fair is fair.” Right? Go Team USA!