Tax on gold medals

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Oscar De La Hoya’s advice for gold medalists

Michael Phelps may be untouchable in the water, but even he can’t out-swim the Tax Man.

America’s Olympic medalists must pay state and federal taxes on the prize money they get for winning. The U.S. Olympic Committee awards $25,000 for gold medals, $15,000 for silver and $10,000 for bronze.

That’s not all. Olympians also have to pay tax on the value of the medals themselves.

Gold and silver medals are made mostly of silver, while bronze medals are composed of mostly copper. Rio’s medals are among the largest and heaviest ever and contain about 500 grams of either silver or copper.

The value of a gold medal is about $564; silver is worth about $305. Bronze is worth a negligible amount so it’s not taxed.

Related: How Michael Phelps changed the business of swimming

Taxes are yet another burden for Olympians — the majority of whom are already struggling to get by.

The U.S. is one of the only countries that doesn’t provide government funding to its Olympians.

A handful of lucky athletes land lucrative endorsement deals. But most of them rely on small stipends from the USOC, support from local businesses or supplemental income from a day job.

Oscar De La Hoya’s advice for gold medalists

Related: U.S. Olympic athletes sure aren’t paid like champions

Olympic medal winners may catch a break though.

Proposed federal legislation would make “the value of any medal or prize money” awarded during the Olympics or Paralympics exempt from income taxes.

The bill was passed by the Senate last month and is being considered by the House. It would apply to earnings from January 1, 2016 to January 1, 2021.

California is reviewing a similar proposal.

Related: Olympic ads to watch

Dr. Steven Gill, a tax professor at San Diego State University, isn’t convinced an exception for Olympians and Paralympians would change anything.

For one thing, the USOC might be tempted to reduce Olympians’ prize money, Gill said.

He added that even tax free, American athletes get a fraction of the financial support that athletes in other countries get.

“When I think about why these prizes exist, it’s to compete with state-supported athletes from other countries,” he said. “Cutting taxes isn’t going to fix the fact that these athletes don’t get paid enough — it’s a short-term fix.”

Gill also noted that other individuals who win prestigious awards are taxed on their winnings. Such is the case with Nobel prize winners although they receive more prize money — around $1 million.

CNNMoney (New York) First published August 12, 2016: 2:54 PM ET

For US Olympians, gold medals come with a hefty tax bill

Image copyright Getty Images Image caption Simone Biles’ tax bill for her Olympic victories could be over $40,000

She has flipped, tumbled and leapt her way into the hearts of millions over the course of the Olympic games. But when Simone Biles returns home she will be in for not just a major celebration but also a hefty tax bill.

The 19-year-old has won five Olympic medals – four gold and one bronze. She has cemented her title as the world’s best gymnast by taking home the gold in the all-around after three successive world championship titles – a feat only accomplished by three others in history.

But all that winning will cost her. On 21 August, Biles could be slapped with a tax bill close to $43,560 (£33,479)

That estimate is based on the $2m that she has accumulated in endorsement deals and assuming she is charged in the highest income tax bracket in the US – 39.6%.

Biles is not alone, her fellow US medallists will be slapped with tax bills for their victories as well.

American Olympians are subject to a so-called “victory tax” – a tax on both the money they receive from the Olympic committee for winning and on the value of the Olympic medal.

What are they taxed on?

US athletes who win a medal at the Rio games will take home the hardware and a cash bonus from the US Olympic Committee.

Gold medallists will receive $25,000, silver medallists get $15,000, and bronze winners earn $10,000.

Those winnings are taxed as income, the same way Americans are taxed on other prize money, like lottery winnings. Most countries exempt their athletes from these taxes.

Image copyright Getty Images Image caption The five members of the US women’s gymnastics team will be paying taxes on those gold medals

But there’s more, the medals are also given a value and taxed. The value is based on the value of the materials the medals are made of.

Gold medals – which are mostly made of silver with a gold plating – are worth roughly $600 based on current commodity prices, silver medals are worth close to $300, bronze medals – which consist mostly of copper – have barely any monetary value, approximately $4.

How much is the tax?

Assuming the athlete was already a high-income earner, paying the top bracket of US taxes, they would be paying 39.6% on the combined value of the medal and cash payout.

Americans for Tax Reform calculated the bills to be: for a gold medallist $9,900, for silver $5,940, and for bronze $3,960.

That’s also assuming the athlete only won one medal.

For US athletes like Michael Phelps and Simone Biles, who have multiple victories, including multiple gold medals that bill could be much higher.

Image copyright Getty Images Image caption Michael Phelps has won six medals at Rio, he will owe taxes on each of them

Some analysts believe Phelps, who’s worth an estimated $55m, could face a tax bill of $55,000.

It’s worth noting athletes in a lower tax bracket would have to pay less and most athletes can deduct the cost of training from their tax bill.

Efforts to change

For years politicians, athletes and fans have debated whether the tax is reasonable.

Why should an athlete who worked so hard to represent and win for their country be charged for their victory?

“This tax places a hardship on our athletes and unfairly taxes them for representing our country and reaching the pinnacle of their sport,” said Jim Leahy, the executive director of the US Olympic luge committee.

Image copyright Paul Gilham Image caption The US Olympic team at the Rio opening ceremony

In July, a bill to stop taxation on Olympians and Paralympians, sponsored by Republican Senator John Thune and Democratic Senator Chuck Schumer, passed a vote by the Senate.

A similar bill has been proposed in the House of Representatives, but it has not come up for a vote.

“After a successful and hard-fought victory, it’s just not right for the US to welcome these athletes home with a tax on that victory,” Senator Schumer said.

He noted that most countries subsidise the cost of training for the Olympics and don’t charge their athletes for winning.

Most US athletes must pay for their own training and few can sustain a professional living on their athletic winnings alone. The US Olympic committee pays for health insurance and stipends for only a small number of US athletes.

This is not the first attempt at changing the taxation rules around Olympic victories.

In 2012, Florida Senator Marco Rubio introduced a bill to prevent Olympic athletes from being subject to taxes on their winnings at the London games.

“We can all agree that these Olympians who dedicate their lives to athletic excellence should not be punished when they achieve it,” said Senator Rubio at the time.

What these Olympians could pay in taxes for winning medals

Another effort to relieve Olympians of the taxes associated with their medals is underway, potentially shielding some of our country’s top athletes from paying thousands of dollars on their wins.

Assemblywoman Nicole Malliotakis is the latest to lead the charge. The Staten Island Republican this week said she wants to introduce legislation to exempt medal winners from paying income tax on the both the value of the medals and the associated prize money. There have been similar efforts in the past, including a bill from senator and former presidential candidate Marco Rubio.

On top of all the money spent on Rio in general, countries typically award their Olympic medal winners with a cash bonus. The United States Olympic Committee pays American winners $25,000 for gold, $15,000 for silver, and $10,000 for bronze. For these winning purses, the Americans for Tax Reforms estimated that, based on tax rates for income earned abroad, Olympians can be taxed up to $9,900 per gold medal, $5,940 per silver medal, and $3,960 per bronze medal. Olympians are also taxed on the value of their medals. For gold, that value is $564 and, for silver, that amount is $305. The value of the bronze medal is not great enough to tax.

We’ve calculated how much some of the U.S.’s most well-known Olympians would have to pay in taxes based on the cash prizes they’ve won in Rio:

Clive Rose/Getty Images

Michael Phelps

Swimming
5 gold, 1 silver
$55,440

TOSHIFUMI KITAMURA/AFP/Getty Images

Simone Biles

Gymnastics
4 gold, 1 bronze
$43,560

ODD ANDERSEN/AFP/Getty Images

Katie Ledecky

Swimming
4 gold, 1 silver
$45,540

THOMAS COEX/AFP/Getty Images

Aly Raisman

Gymnastics
1 gold, 2 silver
$21,780

Harry How/Getty Images

Ryan Lochte

Swimming
1 gold
$9,900

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The last time the Olympics took place in Rio de Janeiro, Brazil, American athletes who medaled had to pay a “victory tax” on their reward money and the value of their medals. But winners at the 2018 Winter Olympics in Pyeongchang, South Korea lucked out.

Back on October 7, 2016, former President Barack Obama signed a bill into law excluding athletes who bring home the gold, silver, or bronze for Team USA from having to pay the IRS taxes on their earnings, making their victory even sweeter. The only exception: High-profile athletes who earn more than $1 million a year, such as swimmer Michael Phelps, won’t be exempt. Bummer.

Previously, the “victory tax” was applied to all medalists’ reward money and the value of their medals.

During the last Olympics, gold medalists received a sum of $25,000, silver medalists raked in $15,000, and bronze winners collect $10,000 — all of which were taxed as income. Meanwhile the value of medals were roughly $600 for gold, $300 for silver, and only $4 for bronze (which are mostly made out of copper). Athletes like Phelps who are presumably higher-income earners (thanks, endorsements) are part of the top tax bracket and paid 39.9% on the combined Olympic earnings.

So, after returning home from the games, gold medalists in this tax bracket had to shell out $9,900, silver medalists owed $5,940, and bronze medalists paid $3,960 — per medal — to the U.S. government. That means athletes who came out on top multiple times had for it — literally.

(h/t BBC)

Lauren Smith McDonough Senior Editor Lauren is a senior editor at Hearst.

Uncle Sam goes for gold, too: Up to $9,900 per Olympic gold medal

Athena Cao USA TODAY Published 2:52 PM EDT Aug 15, 2016

Michael Phelps swims fast, but not fast enough to beat Uncle Sam, who awaits him at the finish line each time he wins a medal. His total income tax bill for the 2016 Games? Up to about $55,000 for his five golds and one silver.

USA’s Michael Phelps kisses his gold after Team USA won the men’s 4x200m Freestyle Relay Final in Rio. GABRIEL BOUYS, AFP/Getty Images

Olympic athletes who bring home medals also bring home cash — $25,000 for gold, $15,000 for silver and $10,000 for bronze — paid for by the United States Olympic Committee. Like any prize winner, from a jackpot hitter to a Nobel Prize recipient, the athletes are taxed because Olympic medals and cash bonuses are considered income, said Steven Gill, associate professor of accounting at San Diego State University.

The maximum possible “victory tax” on the bonus for each gold medal, using the top tax rate of 39.6% for the nation’s highest earners, is $9,900, according to Americans for Tax Reform. For silver, it’s $5,940, and for bronze it’s $3,960. Athletes in lower tax brackets would owe less — and keep in mind that some or all of their massive training expenses would likely be deductible, whether they treat their sport as a business or a hobby.

The medals themselves are taxed, too, but they’re not as valuable as their shiny goodness may appear. Based on the commodity prices of the metals involved, gold is worth in the neighborhood of $600, silver about $300 and bronze next to nothing. What they’d go for on the open market is much higher, easily $10,000 or more, but that’s not a factor unless an athlete sells or otherwise disposes of the medal, according to tax expert Blake Christian, partner at Holthouse Carlin & Van Trigt.

Congress has tried to give Olympic athletes a tax break. In 2012, Sen. Marco Rubio, R-Fla., introduced a bill to shield medals and bonuses from Uncle Sam, but it died. “We can all agree that these Olympians who dedicate their lives to athletic excellence should not be punished when they achieve it,” Rubio said in a statement then.

This year, Sens. John Thune, R-S.D., and Chuck Schumer, D-N.Y., sponsored a similar bill to eliminate taxes on Olympic and Paralympic athletes. The bill passed the Senate in July. “Our Olympian and Paralympic athletes should be worried about breaking world records, not breaking the bank, when they earn a medal,” Schumer said in a statement last week.

As for Phelps and his maximum Olympic tax bill of $55,440, don’t worry. He probably won’t have a hard time paying up. His net worth is about $55 million, according to Celebrity Net Worth.

Published 2:52 PM EDT Aug 15, 2016

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Oct 7, 2016

  • Associated Press

WASHINGTON — Olympic athletes who bring home the gold, silver and bronze for Team USA will no longer pay a “victory tax” for their achievement under a bill that President Barack Obama signed into law Friday.

The IRS will now be prohibited from taxing most medals or other prizes awarded to U.S. Olympians.

The U.S. Olympic Committee awards cash prizes to medalists, ranging from $25,000 for gold, $15,000 for silver and $10,000 for bronze. The cash prize comes on top of the value of the medals themselves: $600 for gold and $300 for silver; bronze medals aren’t worth much.

The money had been considered earned income, making it subject to tax. Lawmakers who objected to the tax passed legislation to eliminate it, citing the levy as an unfair burden on U.S. athletes who spend years sacrificing and training in their sport, often at great financial expense.

But not all Team USA medalists will be exempt. The tax will still apply to high-profile athletes who earn at least $1 million a year, such as swimmer Michael Phelps.

Other measures signed into law on Friday will:

–Establish a federal bill of rights for sexual assault survivors to ensure that plaintiffs in federal criminal cases have the right to a sexual assault evidence collection kit, to be told of the results and to be notified in writing before the kit is destroyed. The law was spurred by the case of Amanda Nguyen, a former Harvard University student who was sexually assaulted in Massachusetts. Nguyen said she was repeatedly required to return to Massachusetts to prevent her rape kit from being destroyed and also had a hard time keeping up with developments in the legal case.

–Make federal buildings more family friendly by requiring that baby-changing stations be installed, within two years, in restrooms in federal buildings that are open to the public. That would include courthouses, post offices, Social Security offices and some government-run museums, such as the Holocaust Memorial Museum and the National Archives.

–Boost efforts to combat wildlife poaching and trafficking by supporting the work of a presidential task force. The law also directs U.S. agencies to work with countries affected by wildlife crime, such as Zimbabwe, where the 2015 killing of Cecil the lion by an American during an illegal hunt sparked a worldwide outcry. Prosecutors will get more tools to go after individuals involved in trophy hunting and other crimes, while the State Department will provide Congress annually with a list of countries considered major sources, transit points or consumers of wildlife trafficking.

For Phelps, the tax bill for the five gold medals and one silver medal he won in Rio could cost him as much as $55,000. Gymnast Simone Biles faces a possible $43,000 tax bill for landing four golds and a bronze.

“Most of these athletes will never sign an endorsement deal or a professional contract, which is why it’s so important that these athletes will no longer be forced to pay a big tax bill when they achieve their Olympic dreams representing the United States,” said Rep. Robert Dold, R-Ill., sponsor of the bill, which cleared the House by a vote of 415-1.

Rep. Jim Himes, D-Conn., cast the lone vote against what he called “bad policy.”

The law applies retroactively to the 2016 Olympic and Paralympic Games in Rio De Janeiro. It will not affect taxes on an athlete’s endorsement or sponsorship income.

Team USA brought home 121 medals from the Rio Games, including 46 gold medals.

Here’s How Much Tax Olympians Actually Pay on Their Medals

For how vaunted Olympic athletes are during the Games, the concept of a “victory tax” on on medals and cash winnings seems in poor taste. But in actuality, most American Olympic medalists take home everything they earn after a 2016 bill changed the tax law.

Thanks Obama. But seriously, thanks. He signed the bill.

What do Olympic athletes actually win?

Turns out it’s kind of a lot. Starting this year and continuing through the 2020 games in Tokyo, the US Olympic Committee awards athletes who win a gold medal $37,500, silver medalists receive $22,500, and $15,000 for bronze earners. This is a 50% increase from the Sochi Games in 2014, which saw athletes receiving $25,000, $15,000, and $10,000, respectively.

This amount is a lot when you consider that many countries, like the United Kingdom, don’t award medal recipients any cash prize whatsoever.

And then there’s a question of the value of the medals themselves. Nobody likes the thought of athletes selling their medals, but it does happen (usually for a good cause). On the open market, however, the value of the medals themselves is actually pretty low. This may shatter some dreams, but gold medals are reportedly just silver medals plated in gold. If they were fully gold, they would carry a value in the ballpark of $25,000. As it stands, they’re really worth more like $600. Silver medals are worth slightly less, and bronzes aren’t worth much at all.

What is the “victory tax”?

Before 2016, the awards Olympians received for medaling were taxed as earned income, much the same as gambling winnings or the bonuses standard corporate employees receive; roughly 37%.

Though for how Olympians are lauded as heroes, and earn these medals on behalf of their country, the concept of the “victory tax” seemed a bit gauche. After some public outcry, the rules were changed in late 2016 (and made retroactive to cover the winners at the 2016 Rio Olympics).

Based on the current rates, if there were still a victory tax, a gold medalist would owe roughly $14,000 to the government, which is not nothing.

How much do Olympians pay on their medals now?

The 2016 bill exempts athletes that earn less than $1 million in a given year from having to pay taxes on their Olympic earnings. So, high-profile athletes like Shaun White or Lindsey Vonn, who bring in massive coin every year on endorsement deals, will likely still be required to pay taxes on their earnings.

One aspect of the Olympic Games many U.S. viewers remain unaware of is the fact that U.S. medalists (like those from many other countries) receive cash prizes along with their medals: $25,000 for gold, $15,000 for silver, and $10,000 for bronze. These rewards are not paid by the International Olympic Committee (which furnishes the medals), but by the U.S. Olympic Committee. Similarly, participants from some other countries receive monetary prizes put up by their home countries’ Olympic committees.

Forbes reported on the issue of medal bonuses in July 2012, noting that:

The biggest medal bonus is offered by Italy, which will pay more than $182,000 for a gold medal. Russia’s medal rewards are also quite rich, and the nation’s gold medal winners will collect $135,000. Even Russian bronze medalists will take home $54,400, more than double the payout for American gold. Neighboring Ukraine has been considering an increase to its already rich payout scale: $100,000 for gold, $75,000 for silver and $50,000 for bronze.

Even Ghana promised its gold medal winners a payout of $20,000, not far behind the American reward.

Perhaps surprisingly, the worst medal bonus is paid by Great Britain. Or rather, not paid. The host nation does not pay a performance bonus to medal-winning athletes.

In July 2012, a blog post alerted many American readers to these prize winnings, noting that the monies earned by Olympic athletes (along with the value of their medals) were considered taxable income and could require gold medal winners to shell out up to $9,000 to the IRS.

While it is true that prize winnings (including cash awards obtained through the attainment of Olympic medals) are considered taxable income in the U.S., it’s unlikely any U.S. gold medal winner would incur a tax liability of anything close $9,000 per gold medal. For starters, that estimation was based upon the assumption that the winner would be paying a 35% tax rate, which (in 2012) only applied to persons earning more than $388,350 per year.

While some athletes may end up realizing incomes that put them into the higher tax brackets through endorsement deals or participation in professional versions of their sports, many athletes earn their medals in lower-profile events that don’t afford them such lucrative money-making opportunities. Additionally, many athletes could probably write off their Olympic prize winnings against the cost of their training and other related expenses, to the point that their tax liability for those winnings would be significantly lowered (if not completely eliminated).

That $9,000 figure was also based on the assumption that medal-winning athletes would be paying taxes on the monetary value of the medals themselves (based on the types and amounts of metal the medals contain), which as CBS News calculated ranged from about $5 to $644:

The gold medal consists of just over 1 percent actual gold. The rest is made up of 92.5 percent silver and 6.16 percent copper — and is only worth about $644.

The silver medal is a modification of the gold medal. The gold is replaced with more copper, making the medal worth around $330.

The bronze medal is made of 97 percent copper, 2.5 percent zinc and 0.5 percent tin — and is only worth about $4.70.

The question of whether the value of Olympic medals is a form of taxable income in the U.S. is still somewhat open. The Financial Post tackled the issue of whether Canadian athletes were responsible for paying taxes on their winnings from the 2010 Winter Olympics, stating that:

As for an Olympics prize, the CRA responded that although winning an Olympic medal may be an internationally recognized achievement and could “indirectly promote a sense of nationalism,” the prize is not awarded in recognition of public service and therefore cannot be considered a prescribed prize that would be tax exempt.

This is consistent with the tax treatment of Olympic prizes in the United States. There is even some precedent in the U.S. for taxing the actual value of the medal itself.

The U.S. case involved legendary shortstop Maury Wills, who played for the L.A. Dodgers. In January 1963, Wills received the S. Rae Hickok belt, awarded annually to the outstanding professional athlete of the prior year.

The value of the alligator-skin belt with a solid gold buckle and an encrusted four-carat diamond, worth more than $6,000 at the time, was found to be fully taxable. The judge, concluding that this was an inequitable result, predicted that absent a change in the U.S. tax law, “the next step would be for the Internal Revenue Service to tax the gold and silver in the medals awarded to Olympic Games’ winners.”

Even if the IRS did consider the value of Olympic medals to be a form of taxable income in the U.S., it’s probably unlikely that agency would come after any athletes who didn’t declare that income on their returns, as Reuters observed in an article on that topic:

Even the medals themselves could be seen as something of value, a gift of a commodity metal, and therefore taxable by the U.S. government, says . Still, Knight doesn’t expect to see the IRS chasing after athletes for a slice of their gold. “I have to imagine that would be a public relations nightmare,” says Knight.

Over the years, members of Congress have offered various proposals to exempt U.S. Olympic medalists from being required to pay taxes on their winnings, without success so far. But they’re still trying, and on 12 July 2016 the U.S. Senate passed a bill (SB 2650) sponsored by Senator John Thune of South Dakota titled “United States Appreciation for Olympians and Paralympians Act” that seeks to exclude as taxable income prize money and medals won through competition in the Olympic Games or Paralympic Games:

Gross income shall not include the value of any medal awarded in, or any prize money received from the United States Olympic Committee on account of, competition in the Olympic Games or Paralympic Games.

This bill still has to be passed by the U.S. House of Representatives and signed by the President before becoming law.

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