The 2014 Olympic Games are well underway and even though I’d hoped to see the U.S. medal count higher, I am in awe of the amazing athletes representing our country.
You might be wondering what the Olympic Games have to do with small business, accounting, and taxes. As a CPA and sports nut, I thought it might be interesting to take a look behind the scenes, so to speak, and consider the tax implications of winning an Olympic medal. It’s a bit controversial, and there are some who believe the current structure should be changed including some members of Congress.
Olympians and the taxing
If you don’t know, I did not, the U.S. Olympic Committee award U.S. Gold Medal winners $25,000. Silver medal winners receive $15,000, and $10,000 goes to bronze medal winners. As an interesting side note, if an athlete representing Azerbaijan wins Gold, he or she receives $510,000. Apparently, they consider the probability (low) of actually paying out when they set their award level.
While the award levels for U.S. athletes are relatively small, they are considered taxable income and could push an athlete into a higher tax bracket. Among those who think the idea of taxing Olympians is wrong is Representative Blake Farenthold (R-Texas). He has introduced H.R. 3987, the Tax Exemptions for American Medalists (TEAM) Act. If passed, H.R. 3987 would amend the tax code so that the money received as an award for winning a U.S. Olympic medal paid by the U.S. Olympic Committee would not count as athletes’ gross income for tax purposes.
What do you think? Should U.S. Olympic medalists be awarded more? Should their awarded amount be taxable? Weigh in and enjoy the remainder of the Games.