Rodefer Moss | Certified Public Accountants and Business Advisors

Every breath you take, every medal you claim, I'll be taxing you

Written by RMTaxTeam | Aug 14, 2012 3:33:43 PM

"Hey, you've just won an Olympic Gold Medal! What are you going to do first?"

Said the athlete: "Pay taxes on it, apparently."

You're an Olympic athlete. You've dedicated your life to achieving a goal attainable only by a select few whose speed, ability, agility, talent and determination have been honed to the finest imaginable edge.

You've won an Olympic medal. After being moved by the stirring strains of the National Anthem, you dismount the victor's podium, and as you walk away waving to the crowd, an unseen apparition strides alongside: an IRS employee figuring up the taxes on the precious metal medal still around your neck.

Here's a portion of an August 3 CNBC story on the subject:

"Taxes on a gold medal could run as high as $8,986, while silver could be $5,385. On a bronze medal, the tax might be $3,500."

"Amateur simmer Missy Franklin, who is still in high school, will owe $14,000 in taxes for her gold and silver medals."

At that rate, swimmer Michael Phelps' tax bill should be approaching the cost of a new aircraft carrier.

Also, medalist receive cash prizes from the U.S. Olympic Committee. Athletes are rewarded on the following scale: Gold, $25,000; Silver, $15,000; Bronze, $10,000. Yes, these winnings are taxed as well.

Sen. Marco Rubio, R-Fla., has sponsored a bill to do away with federal income taxes on medals and prize money awarded to U.S. athletes.

With respect to taxing the actual medals, California U.S. Rep. Mary Bono Mack is joining with Democrat Rep. G.K. Butterfield, D-N.C., to sponsor a bill to eliminate taxes on U.S. Olympic medalists:

"Taxing Olympic medalists exposes the absurdity of the U.S. Tax Code. It's a mess and in desperate need of a complete overhaul," Bono Mack, R-Palm Springs, said Thursday, August 2. "Really? What's next: taxing our kids' soccer trophies?"

Rep. Mack might have done well to have left out that last statement about soccer trophies. Somewhere, an IRS employee is thinking that she just may be on to something.