The New Meaning Of Olympic Deductions

Every time the Olympics roll around I learn something new.  This year I learned that synchronized swimming now is co-ed, rhythmic gymnastics is still a sport you can compete in and trampoline is apparently a competitive sport.  Just when I thought that was going to be enough knowledge to absorb from the 2012 race for gold medals, it was brought to my attention this year that the American athletes are taxed on their winnings.  A lifetime of training plus all the associated costs that go with that and as soon as they are awarded their medal the American Olympians should contact their CPA as their tax status changed.  I never realized that this is something that’s been going on for years.  However, we are possibly the only country that has this rule.

Photo from ABCNews.go.com

Did you know that when a person is awarded a medal they also get a monetary prize?  Don’t feel bad if the thought never even crossed your mind as I had no clue.  It is naïve on my part to assume that the medal was the prize, but that’s what I’ve always done.  According to the Americans for Tax Reform, any of our 529 American athletes that win a medal at the 2012 Olympics this year will be subject to both a medal tax and a prize tax that adds up to quite a hefty penny as it’s considered to be up to 35% of their winnings.

It fascinates me that the U.S. is possibly the only country that taxes any income earned overseas by its taxpayers.  While watching the Fab 5 strive toward their gold medals in gymnastics just think about how those gals, many of which are in high school still, will be responsible for paying $8,986 for each gold they bring back with them.  That sure dips into their college fund!  Now there are deductions they can take for any unreimbursed expenses related to their sport and a few other small rules, but still that’s quite a bill to be facing when you return home to the country you so proudly represented in London.

From CBSNews.com

Last Wednesday, according to CBSNews.com,  our very own Florida state Senator Marco Rubio introduced a bill that would allow these prizes to be exempt from taxes.  I’m sure that is something Ryan Lochte and several others would be happy to hear about since they hail from the sunshine state.  It’s undetermined how this is going to play out in the end, but I can say that this Olympic year left me with quite a bit to think about.  I hope all the American athletes have a wonderful second week at the Olympics and travel home safely after all their hard work.

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