by Michael Lodge
This has been a point of discussion for a long time. For many years the prizes and awards given by the Olympics have been taxed in the United States. Representing our country and they get taxed. So Congress changed things and the President signed the bill.
President Obama has signed legislation exempting Olympic and Paralympic athletes from taxes on their medals and winnings.
The Senate passed similar legislation, sponsored by Senators Chuck Schumer, D-N.Y., and John Thune, R-S.D., in July with a unanimous vote (see Schumer Proposes to Exempt Olympic Medals from Taxes). President Obama signed the bill into law last Friday.
The U.S. Olympic Committee awards cash prizes to medal winners—$25,000 for gold medalists, $15,000 for silver medalists and $10,000 for bronze medalists—and those have traditionally been subject to taxes. The IRS considers the money to be income earned abroad, and the monetary value of the medal is also taxable.
The bill exempts the value of medals won and other prizes awarded by the U.S. Olympic Committee from athletes’ taxable income if their income is under $1 million during that year. The bill would not affect taxes on endorsement money or sponsorship income earned by athletes, however. It retroactively applies to the 2016 Olympic and Paralympic Games in Rio De Janeiro, Brazil.
“Our Olympic and Paralympic athletes make tremendous personal sacrifices while training to represent Team USA—most of the time with very little financial help—but until now the IRS has been taxing them on the value of their medal and award,” Dold said in a statement Friday. “Our bipartisan bill has ensured that when Team USA athletes return home with a medal, they will not receive a tax bill from the IRS. 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.” written by BY MICHAEL COHN, Tax Pro Today.