by Caitlin Rossiter
As you watched those spectacular athletes competing in the 2012 Olympic Games in London, were you thinking about the consequences of winning an Olympic medal? It turns out that there is a cost—and I don't mean the many hours of grueling and expensive training—for American athletes who win Olympic medals: they pay taxes on their awards. At least a few members of Congress and state legislatures think this is unfair and are trying to do something about it.
The United States Olympic Committee pays athletes cash awards of $25,000 for gold, $15,000 for silver and $10,000 for bronze. According to the United States Tax Code, athletes (just like Nobel or Pulitzer Prize winners) must add cash awards to their taxable income on Line 21 of Form 1040.
The United States is one of only a handful of countries, including the Philippines and Eritrea, that tax their Olympic athletes on medals won according to a recent British Broadcasting Corporation publication.
Athletes devote considerable time to training and may face difficulties in balancing jobs and their athletic endeavors. Most U.S. national sports organizations cover training and travel costs for those who make the national team. Some athletes accept endorsements to help compensate for expenses. But American athletes who accept endorsements are no longer eligible for scholarships through the National Collegiate Athlete Association because they are no longer classified as amateurs.
Given the sacrifices that athletes must make to win honor for themselves and their country, some legislators think their medals and proceeds should be tax exempt.
U.S. Senator Marco Rubio (R-Florida) proposed SB 3471, and Congressman Aaron Schock (R-Illinois) introduced HR 6267, both bills to amend the 1986 Internal Revenue Code and exempt Olympians from paying taxes on their winnings. The proposed bills have bipartisan support, including both President Barack Obama and Mitt Romney. The United States Olympic Committee has not stated their position.
Thirty-seven states, the District of Columbia and Puerto Rico base their income taxes on the federal income tax code. To date, no states exempt Olympic medals from state income tax. However, in 2012 legislators in at least three states have introduced bills to do so. A bipartisan Olympic coalition of five California legislators—two Democratic senators and three Republican Assembly members—introduced legislation that is working its way through the Senate after passing unanimously in the Assembly. New Jersey Senators Stephen Sweeney (D) and Thomas Kean (R) have introduced SB 1855. Ohio Representative Andrew Brenner (R) plans to introduce HB 583 when the General Assembly reconvenes next session.