U.S. Olympians: Winning in Rio But Losing on Taxes!
The 2016 Rio Olympics have come to an end. Now that the medals are home and the athletes are basking in the glory of their wins, some unforeseen expenses are being put on American Olympians. Behind the coordinated uniforms and the tough athlete demeanor comes a sour point that shows itself only after the initial excitement of having won a medal – Taxation! or “Victory Tax” as it known.
Victory Tax is a tax imposed on the athlete for his or her winnings. Additionally, athletes are taxed on his/her endorsement deals, which are considered taxable income. Each medal has its own value, which is determined by the value of the metal in which it is made.
For example, U.S Olympian Michael Phelps, will have to pay approximately $9,900 for each gold medal he has won in Rio and $5,940 for his silver medal. A bronze medal enforces a tax payment of approximately $3,960, according to the Americans for Tax Reform. In addition to paying taxes on the medals, American winners are also facing taxation on the monies paid to them from endorsement deals, which is considered to be taxable income. If the athlete falls in a high-income bracket, he/she faces a total taxation of about 39.6%.
In July 2016, a bill was presented and sponsored by U.S Senators, Republican John Thune and Democrat Chuck Schumer to exempt Olympians from taxation on winnings, because of the hard work put forth by each athlete with endless trainings in the hopes of representing their country.
It is uncertain whether the bill will pass and grant a much needed break for U.S. Olympians. As of now, American Olympians will have no choice but to pay the Victory Tax to avoid even steeper penalties in the future.