Congress is considering a TEAM effort to allow Olympic medal winners to keep their winnings without having to pay Uncle Sam a share of the gold, silver or bronze they bring in.
TEAM as in the Tax Exemptions for American Medalists Act (H.R. 3987), introduced in the U.S. House of Representatives on Feb 4, 2014 by Rep. Blake Farenthold from Texas.
Timed to perfection to coincide with the Winter Olympic Games in Sochi, the purpose of the TEAM Act is very specific – “Amends the Internal Revenue Code to exclude from gross income, for income tax purposes, the value of any medal or prize money received on account of competition in the Olympic Games.”
Unlike other tax law amendments that spill over into large reams of paper and are sure to raise objections from at least half of Washington DC, the TEAM Act is a simple half-page worth of legislation that no one really objects to, if only because no cares about it – other than the medal winners.
If passed into law, the bill becomes retroactively effective as of Dec 31, 2013, which means U.S. Olympic team members returning back from Sochi with medals may not be taxed on their winnings.
The tax they need to pay under current law includes the income tax on the value of the medal they win, plus the prize money they get from the U.S. government.
For the record, the U.S. Olympic Committee awards Olympic team members $25,000 for a gold medal, $15,000 for a silver medal and $10,000 for a bronze.
The actual medal itself is not really a factor, because it doesn’t have that much intrinsic value based on the market prize of the metal.
The Sochi gold medal contains just 6 grams of gold with a 999 hallmark, while most of the rest is. All told, the podium value of the Sochi gold medal is around $566.
The Sochi silver medal is worth only about $323. The bronze medal, made of copper, tin and zinc, is worth is $3.25.
So, basically, as far as income tax on Olympic medals is concerned, it’s a non-issue and its inclusion in the proposed bill is a complete waste.
That leaves the question of taxing the prize money. That would depend on the tax bracket into which the medal winner falls. Most first-time medal winners are young and not wealthy enough to fall under the 35 percent bracket or even the 28 percent bracket.
Let’s say a gold medal winner adds taxable income of $25,566 in the 25 percent bracket, which means $6391.50 in taxes. Even this could more than be balanced out by showing deductions for training, equipment and other expenses related to the income.
Practically speaking, this bill isn’t going to make the IRS cash counters go ka-ching, so to speak. But it’s a good motivator for athletes to try and bring home more medals.
Photo - sochi2014.com