Like many Americans, I have enjoyed watching with great pride so many of our Olympic athletes take to the podium to receive their hard-earned prize: an Olympic medal. The sound of our national anthem rising above the crowd is powerful, and I often wonder what must be going through the minds of the winning athletes. I assume there’d be thoughts of all of those who supported them, shuttling them to and from those early morning gym sessions and late-night practices. But after the cheering crowds subside and our anthem fades away, there’s one other thing they should be aware of: TAXES!
Forbes recently had a great article by Kelly Phillips Erb, discussing the potential tax consequences that come with being an Olympic champion. As Kelly mentions, U.S. Olympic athletes actually receive bonus payments in addition to the medals they receive: $25,000 for each gold medal, $15,000 for each silver, and $10,000 for each bronze. Given these figures, Michael Phelps – winner of 5 gold medals and one silver medal – will leave the Rio games $140,000 richer, with such award income being considered taxable by the IRS. That, of course, is nothing compared to the taxable endorsements and other income streams that will continue to come his way!
But the tax consequences don’t end there for our medalists. Kelly’s article also references valuations for this year’s medals, with the value of a gold medal pegged at approximately $564, and silver at $305. As for bronze…well…let’s just say the memories of winning the bronze are worth far more than the near-zero value of the actual materials (and hey – memories aren’t taxable…yet!). Since the value of non-cash prizes such as trophies and medals are also generally considered taxable, Michael Phelps would be looking at additional taxable income of $3,125 based on his medal valuations! (As a brief aside, I highly recommend reading the Forbes article by Anthony DeMarco from which Kelly obtained these medal valuations; it contains all sorts of interesting facts on this year’s Olympic medals.)
Regardless of any potential tax consequences for our athletes, however, I’m quite certain every one of them would consider such things to be inconsequential compared to the joy of rising to the pinnacle of their chosen sports. And I – along with everyone here at our firm – congratulate every U.S. Olympic competitor on their perseverance and commitment. They are examples of what makes our country wonderful!
