The taxman cometh, even when you’re overseas winning for him at the Olympic games.
As Jonathan Berr, writing for CBS Moneywatch, reported that the U.S. Olympic Committee awards athletes bonuses for landing at the top; $25,000 for a gold medal, $15,000 for silver and $10,000 for bronze.
“Under IRS rules, these payouts are treated as income, and are subject to taxes,” Berr writes.
There have been efforts in the past to exempt Olympic athletes from the tax that Sen. Chuck Schumer (D-N.Y.) has referred to as “the victory tax.” Legislation passed the U.S. Senate but failed in the House of Representatives. Schumer issued a statement recently calling on the House to pass bipartisan legislation that would exempt Olympic winners from paying income taxes on their medal earnings.
“Our Olympian and Paralympic athletes should be worried about breaking world records, not breaking the bank, when they earn a medal,” Schumer said in the statement. “Most countries subsidize their athletes; the very least we can do is make sure our athletes don’t get hit with a tax bill for winning. After a successful and hard fought victory, it’s just not right for the U.S. to welcome these athletes home with a tax on that victory.”
Color of Money question of the week
Do you think Olympic athletes should have to pay taxes on the bonuses they get for winning a medal? Send your comments to firstname.lastname@example.org. In the subject line put “Olympic Winners.”
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Just how much can you make as an Olympic winner?
As you watch the summer Olympics and see Michael Phelps grab another gold medal or other athletes win, you might think: “Man, they are about to get paid!”
It’s true that the superstars can bring home not just medals but mega opportunity for some major paydays. But not all that glitters turns out to be gold, bronze or silver for other Olympic winners. Many don’t see big paydays.
Wired had a fascinating story recently about how hard it really is for many of the Olympic champions.
Davey Alba in writing for Wired points out, “While the games show athletes at the peak of human potential, it rarely does much for their earning potential.”
In fact, when you factor in the time and money spent training to make it to the Olympics many athletes are losing out on working experience to help them get a job.
“Olympians can earn a living on prize money, sponsorships and speaking engagements, but not everyone gets that chance,” Alba writes. “And U.S. athletes don’t receive the government support paid to their competitors abroad.”
Alba adds: “Olympic sports rarely provides a decent income to anyone but the biggest stars.”
Read Alba’s breakdown of the big payoff for the biggest Olympic stars.
But, of course, getting to the Olympics for many athletes comes with something you can’t put a price on.
Are you watching your money go as you play Pokémon Go?
This is the summer of the the Pokémon Go phenomena. In this popular game users interact virtually with Pokémon characters placed in real world settings. The app is free to download but many people are forking over money to pay for paying for in-app purchases that help them gain an advantage in the game.
So for last week’s Color of Money question I asked: Have you paid to play and if so, why oh why?
Beth Young from Orlando said she has made in-app purchases. “Since the game was released, my daughter started joining me on nightly walks,” she wrote. “I enjoy the exercise and the togetherness, but what persuaded her to join me is the chance to catch Pokemon and hatch eggs. One day she ran out of Pokeballs and declined our walk. (No Pokestops within walking distance, alas.) I understand that it’s depressing to run into a desired Pokemon and not be able to catch it, and I was happy to send her a Google Play gift card so she could restock. It helped that she had been particularly helpful around the house that week, but I pay for other things my kids and I do together — restaurant meals, movie tickets, etc. — and see this as the same kind of thing.”
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Readers may write to Michelle Singletary at The Washington Post, 1301 K St. NW, Washington, D.C. 20071, or email@example.com. Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested. To read previous Color of Money columns, go to washingtonpost.com/business.