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Olympic Medalists & Taxes

US athletes who win medals in Rio may have to pay income tax on their prize winnings as well as the value of their medals.  The International Olympic Committee pays medalists $25,000 for gold, $15,000 for silver, and $10,000 for bronze.  This is included in the athletes' income for tax purposes.  The value of the medal itself is also taxable income under current law.  That could all change soon.  The Senate has passed a bill that will exempt these winnings from income tax.  The House will vote on it in September when they return from their current break.  Bills like this have been brought up in the past but have never made it into law.

Most athletes  may not actually pay any income tax on these winnings, even under current law.  They are allowed deductions for ordinary and necessary expenses if they treat their participation in their sport as a business.  Even as a hobby, they can take deductions against the winnings to reduce income tax on them.

For now, we will have to stay tuned for the final decision.


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