Millions of Americans are cheering on United States Olympians at the 2014 Sochi Winter Olympic Games. There is one particular U.S. department that is cheering much more than others: the Internal Revenue Service. Why? For taxes of course!
U.S. Olympic medallists will have to pay federal taxes on all of the awards given by the U.S. Olympic Committee (USOC). It is estimated that they will have to fork over approximately one-third and declare it as income earned overseas.
The USOC allocates $25,000 for gold medals, $15,000 for silver medals and $10,000 for bronze medals. Athletes who earn the top tax bracket will have to pay the federal government nearly 40 percent of their earnings. According to data from Americans for Tax Reform (ATR), 230 U.S. athletes competing in Russia will pay between $1,000 (bronze) and $9,000 (gold) in taxes if they win medals.
“Additionally, because the U.S. is one of only a handful of developed countries that tax income earned abroad, it is likely America’s competitors will not be subject to such a tax,” said the ATR in a statement. Taken together – the tax on Olympic athletes and the tax on income earned abroad – it can be said the U.S. has officially ‘earned the Gold’ for having one of the most backwards and illogical tax codes in the world. “
Last week, Texas Republican Congressman Blake Farenthold reintroduced the Tax Exemptions for American Medalists (TEAM) act which would exempt professional athletes from paying taxes on the achieved medals and the money that comes with it.
“This needless tax illustrates how complicated and burdensome our tax code has become,” he said. “We need a fairer system for all, and eliminating this unnecessary tax burden on our athletes is a good way to start.”
The concept behind the legislation has previously been endorsed by President Obama and former 2012 presidential candidate Mitt Romney.