As the 2014 Winter Olympics get under way athletes will see the fruits of their labor begin to pay off as soon as Saturday when the first Olympic medals will be given out. For some countries’ athletes, winning a medal includes a paycheck as high as $510,000. For the United States’ athletes, winning a medal means paying taxes.
An American athlete will receive from the United States $25,000 for every gold medal they earn in Sochi, $15,000 for silver, and $10,000 for bronze. In addition to these salary amounts that haven’t changed for inflation in over a dozen years, our Olympic heroes could receive a tax bill from the United States for nearly $10,000 - the price of a bronze medal!
An American athlete will receive from the United States $25,000 for every gold medal they earn in Sochi, $15,000 for silver, and $10,000 for bronze. In addition to these salary amounts that haven’t changed for inflation in over a dozen years, our Olympic heroes could receive a tax bill from the United States for nearly $10,000 - the price of a bronze medal!
Our Olympic heroes could receive a tax bill from the United States for nearly $10,000 - the price of a bronze medal!
The United States is the only major country in the world to tax individuals based on their citizenship and not their residence. This means citizens owe the U.S. taxes for income received “from foreign sources”. Therefore, income earned by the Olympic Athletes in Sochi, Russia is taxable by the United States.
The good news is that they won’t have to pay any income taxes to Russia where they earned that medal unlike what many professional athletes in the States are used to paying.
Thanks for your four years of hard work and dedication to our country.2
UPDATE: Congressmen Blake Farenthold (Texas), Walter Jones (N.C.) and Pete Sessions (Texas) introduced a bill in the House of Representatives last Wednesday to exempt from taxes the money the US athletes earn for winning a medal at the Olympics.
This is not the first time a bill of this nature has been introduced. Senator Marco Rubio (FL) proposed a nearly identical bill in 2012 when the London Summer Olympics were under way.
We will pass along if this bill gains any traction.
The good news is that they won’t have to pay any income taxes to Russia where they earned that medal unlike what many professional athletes in the States are used to paying.
Thanks for your four years of hard work and dedication to our country.2
UPDATE: Congressmen Blake Farenthold (Texas), Walter Jones (N.C.) and Pete Sessions (Texas) introduced a bill in the House of Representatives last Wednesday to exempt from taxes the money the US athletes earn for winning a medal at the Olympics.
This is not the first time a bill of this nature has been introduced. Senator Marco Rubio (FL) proposed a nearly identical bill in 2012 when the London Summer Olympics were under way.
We will pass along if this bill gains any traction.
1 - Assuming maximum 2014 federal tax rate of 39.6% * gold medal $25,000 = $9,900.
2 - It should be noted that these athletes are allowed to deduct the expenses that go into working for that medal. Those expenses many times will outweigh the amount of money they will receive for winning a medal but those expenses occurred well before this tax year began in January. Unless the athlete qualifies for a net operating loss in prior years, the 2014 tax year will only reflect the income from the medal and the subsequent tax on that medal.
2 - It should be noted that these athletes are allowed to deduct the expenses that go into working for that medal. Those expenses many times will outweigh the amount of money they will receive for winning a medal but those expenses occurred well before this tax year began in January. Unless the athlete qualifies for a net operating loss in prior years, the 2014 tax year will only reflect the income from the medal and the subsequent tax on that medal.
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