People across the nation have been glued to their televisions over the last few weeks, eagerly watching Olympians from across the globe compete in a variety of events and cheering on members of the U.S. team in their quest for the gold.
Interestingly enough, the Rio games have served to revive a longstanding debate here in the U.S. as to whether those athletes who make it to the medal podium should be exempt from federal taxes.
While most people might not realize it, the U.S. Olympic Committee currently pays athletes who take gold $25,000, those who take silver $15,000 and those who take bronze $10,000. Indeed, this is in addition to other sums of money awarded by various U.S. sports organizations.
The IRS, in turn, has long treated not only this money, but also the medals (the gold and silver medals can cost upwards of $300-$564), as income. As such, those who make more for their athletic achievements will end up paying more in taxes, meaning someone like swimmer Michael Phelps or gymnast Simone Biles, who take home far more owing in large part to their celebrity, will be hit with a much larger tax bill than those Olympians who are truly amateurs.
Motivated in large part by Olympic-inspired patriotism, federal lawmakers have long argued that U.S. athletes should receive a tax break on their winnings. Indeed, Florida Senator Marco Rubio introduced a bill calling for this back in 2012, which despite being endorsed by President Obama, ultimately died without a hearing.
However, experts indicate that this might be the year that the idea of tax breaks for Olympians becomes a reality.
That's because a bill co-sponsored by Sens. Chuck Schumer (NY) and John Thune (SD) calling for exactly this -- with tax breaks being extended to medalists who participated in the Rio games and other Olympiads going forward -- was passed by the Senate in June.
It's now before a crucial committee in the House of Representatives, which has already identified it as a priority upon return from the recess in September.
What are your thoughts on the idea of tax breaks for Olympians? Do you support it, or do you agree with critics who argue that U.S. athletes should be treated no differently than Nobel Prize winners or even the average taxpayer?
Please consider speaking with a skilled legal professional to learn more if you have questions or concerns about tax compliance or other tax-related matters.