Competing in the Olympics is a big deal. The opportunity to represent one’s country in front of the world is cherished. What about coming away with a medal? Only the best in the world will compete this winter, and even fewer will walk away victorious. Olympic medalists are rewarded handsomely. But how much? And what taxes will they face upon returning home?
Winter Olympics reward for earning a medal (USA contestants):
- Gold: $37,500
- Silver: $22,500
- Bronze: $15,000
These cash prizes are 50% greater compared to what American medalists earned in 2016. This may seem like a generous sum, but how does it stack up versus other nations? Well, in the 2016 Summer games, a Singaporean athlete was awarded $753,000 for a gold medal. Not too bad, right?
You might think Olympians would face a hefty tax bill upon returning home with this amount of prize money. In fact, thanks to legislation passed in 2016, Olympic victors do not have to pay taxes on their winnings. That’s right, tax-free earnings.
This wasn’t always the case. In the past, the cash prize for an Olympic medalist was earned income abroad and subject to taxation by the IRS. This tax could be as much 39%. Cash prizes are ordinary income and should be added on to your annual income when you file a tax return.
Need help calculating your expected taxes? Try our free salary paycheck calculator.
These free resources should not be taken as tax or legal advice. Content provided is intended as general information. Tax regulations and laws change and the impact of laws can vary. Consult a tax advisor, CPA or lawyer for guidance on your specific situation.