Pretend you’re Michael Phelps for a second.
You’ve just won your 19th Olympic medal, making you the most-decorated Olympian of all time. You’re on top of the world.
So what’s next? Thousands of dollars in taxes, apparently!
In addition to gaining some shiny new hardware, the U.S. Olympic Committee, a non-profit organization located in Colorado Springs, awards each gold medal athlete with a $25,000 prize. Silver medalists receive $15,000 and bronze medalists walk away with a cool $10,000.
Sounds like a sweet deal, right? Well, despite becoming instant American heroes, the medalists are still subject to a tax on their winnings.
That means Gabby Douglas and the rest of the Fab Five gymnasts will owe Uncle Sam up to $8,986 for each gold medal they bring back to the States!
Okay, maybe you don’t feel so bad for Michael Phelps. He makes millions in endorsement deals, but what about lesser-known athletes like Kayla Harrison, who just earned our country’s first-ever gold medal in judo?
Turns out she won’t have to pay all of that back. Not to get all tax nerdy on you, but she can claim an exemption and a standard deduction on her forms, which will end up covering about a third of the bill for her, half of the expenses for a silver medalist, and nearly the entire amount for a bronze medalist.
Additionally, Olympians can deduct their expenses for all the things they invested in to earn their medal, such as travel and training.
That being said, one member of Congress has introduced a bill to make their winnings tax-exempt.
Critics of the initiative say that tax exemptions such as these will do little to help balance the budget and pay for programs like Medicare and Social Security.
- Do you think Olympic athletes should pay taxes on their prize money? Sound off in the comments section!
-Sarah Carroll, 97.1 AMP Radio, Los Angeles