When you think of the Olympics and competing at the Olympics, you probably think of the prestige of competing on the world stage. These athletes, who have trained most of their lives, have the chance to show their abilities to the world. For many, this is the pinnacle of athletic success.
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It turns out that in addition to fame, there is also a small fortune!
Each country has an Olympic committee and this body can reward an athlete for his performance in a given sport. The amount varies from country to country, but the US Olympic Committee awards athletes $ 25,000 for a gold medal, $ 15,000 for a silver medal and $ 10,000 for a bronze medal. Some countries don’t offer cash prizes, like Great Britain, and many offer six digits, often just for gold medals.
The medals themselves also have intrinsic value since they are made of gold, silver and bronze. However, the gold medal is not 100% gold. This is mostly silver (494 grams) which has been gilded with 6 grams of gold. While this is likely to have a much higher value to the athlete, the merge value is still several hundred dollars.
So how are athletes taxed on their winnings?
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Since the Olympics are held in Rio de Janeiro, the prize money is considered income they earned overseas and is still subject to IRS tax. The United States, unlike many other countries, has a global tax system rather than a territorial tax system, meaning that any income earned abroad is subject to both local taxes and taxes. US taxes. While many other countries exempt the Olympic prizes as a special case, the United States does not.
Competition prize money does not mean income is treated any differently. If you are Michael Phelps, who earns millions of referrals that put him in the highest bracket of 39.6%, you will have to pay $ 9,900 for each gold medal, $ 5,940 for each silver medal and $ 3,960 for each bronze medal. If, however, you are in the lowest 10% tax bracket, you will only owe $ 2,500, $ 1,500, and $ 1,000 for gold, silver, and bronze, respectively. As for the value of medals, they are also considered taxable since they are awarded based on the athlete’s performance.
In other sports that have prize pools, such as golf, you can deduct expenses. With the Olympics, most athletes will also have their travel and other expenses paid for by the committee. In this case, they would not have any offsetting expense on the income.
Before you get excited about athletes being taxed on their wins, remember that the athlete’s brand and marketing power is skyrocketing under the bright lights of Olympic competition. While $ 25,000 is a fantastic sum to win gold, the number of mentions and speeches an athlete is about to get upon his return home will make the tax bill unimportant. UNITED STATES! UNITED STATES! UNITED STATES!