As if it doesn't take an obscene amount of money for an athlete to get to the Olympic Games, it costs them even more if they win a medal. In addition to the medal they are given, the US Olympic Committee awards each winning athlete a certain amount of prize money. While this seems like a lovely gesture of pride, most athletes don't realize how much the US charges them to be on top. Athletes are forced to pay US taxes on the prize money they are "given" and on the overall value of the Olympic medals themselves. But why is the US penalizing their own winning athletes?
The United States Olympic Committee gives each medal winner a cash award. Gold medals get $25,000, silver medals get $15,000 and bronze medals get $10,000. Uncle Sam and the Internal Revenue Service (IRS) consider every dollar of this "cash award" to be taxable income. Athletes who are paying the highest rate of tax could end up with a big fat bill for $8,750. That doesn't include the tax for medals. For gold, silver and bronze, athletes are looking at an additional $236, $135 or $2.
But why would the US subject this kind of penalty on the very athletes who worked so hard to make us all so proud? The men and women who are representing our country overseas in the Olympic Games should not have to worry about paying a tax bill when they get back home.
Most of the countries who participate in the Olympic Games have what is known as a "territorial" system of taxes. This means that tax is applied just one time and that is generally in the country where the money is earned. With the 2012 Olympic Games being held in London, the athletes would theoretically owe tax to the United Kingdom where they earned their money. However, the UK put several tax exemptions in place for Olympic competitors. One of these tax exemptions was for any prize money the athletes earned.
While it would seem that winning US athletes should be covered by this UK exemption, that's where Uncle Sam makes his ugly presence known. The US has what is known as a "worldwide" tax system. This means that any earnings made by a US citizen overseas are subject for both local and US taxes. Many critics of the worldwide system say it does nothing but force people to pay taxes twice.
Lucky for the 2012 US Olympic athletes, it's an election year. Members of Congress from both the Democratic and Republican parties have each proposed bills to give the Olympic athletes all of their earnings ... without paying the price for being a winner.
Want an easy way to know which Olympics events are airing when, and on which channel? The BuddyTV Guide app's new "2012 Olympics" listings puts all the events, organized by your airtimes and channels, in the palm of your hand.Nikki SeayContributing Writer(Image courtesy of NBC)