For many athletes, even competing in the Olympics is a dream come true. There are only a select few whose perseverance enables them to stand out in the fierce competition and clinch the elusive Gold; yet, at the end of all their effort, the US government gets to enjoy a piece of their pie.
The Internal Revenue Service (IRS) treats both the lottery winners and the Olympics medal winners equally. In fact, the medal winners are no different than a person who hits a jackpot on his weekend in Vegas. The prize money is treated as income and is taxed as such.
The United States Olympics Committee (USOC) rewards the Gold medal winners with $25000 while the silver and bronze medal holders bag $15000 and $10000 respectively. The IRS earmarks the same amount of taxation. However, the tax rate depends on the total annual income of the athlete.
If an athlete makes a seven-figure income annually, the tax rate goes as high as 39.6 percent. Nonetheless, most of the athletes are taxed at 15 percent. An Olympic Gold medal winner usually pays anywhere between $3750 to $9900.
A bill presented by Senator Marco Rubio in 2012 proposed that the Olympic winners might be exempted from the taxation, however, it was not approved. The Olympians this year might be able to keep all their winnings if a more recent bill is approved by the House of Representative this month. Till then, the government always gets to have it’s share in the winnings!