Encino, CA (PRWEB) August 07, 2012
America’s top athletes train hard and prepare for years to achieve their ultimate dream of performing on the Olympic stage. For the most part, Olympic athletes are supposed to retain amateur status, which means they do not get paid specifically for training or performing; however, Michael Rozbruch, CEO and founder of Tax Resolution Services, Co., reported in a recent blog post that a current stipulation in the U.S. Tax Code requires winning Olympic athletes to pay hefty taxes to the IRS on the medals and prize money they win during the Games. The value of the medals and the cash prizes Olympians receive for winning a medal are considered taxable income at a high rate of 35 percent, according to a Huffington Post article.
“It’s unfortunate that these hard-working athletes put everything they have into representing our country on the biggest stage of them all, only to come back to the States potentially owing hefty taxes to the IRS,” said Rozbruch. “The athletes who win may not realize how to report winnings and awards properly which means they could get hit with tax problems.”
The way the tax code is written as of now, the amount of taxes owed depends entirely on whether the athlete wins gold, silver, or bronze, and how many medals the athlete wins. For example: a gold medal is currently valued at approximately $675 and is accompanied by a cash bonus of $25,000, awarded by the U.S. Olympic Committee; a silver is worth $385 and a cash bonus of $15,000; and a bronze is worth under $5 but comes with a $10,000 cash bonus. For someone like swimmer Michael Phelps, who has won more than 20 medals (17 of them gold, as of this writing) over the course of three Olympic Games, that tax debt can really add up quickly. “Multiply those numbers by 35% and you’ll see how quickly the IRS tax debt adds up,” says Rozbruch.
However, help for the Olympians might be on the way. According to an article in the Tampa Bay Times’ PolitiFact section, U.S. Senator Marco Rubio (R-FL) introduced the Olympic Tax Elimination Act on August 1, 2012, which would allow U.S. Olympic winners to avoid paying taxes on their medals and earnings. So far, it’s unclear whether or not this bill will gain traction, but at least Olympic athletes have someone fighting for their hard-earned winnings.
Nonetheless, amateur Olympic athletes who win medals in the London Games could stand to face unexpected tax debt when the Olympics are over. It’s important for these athletes to realize that they do have tax rights, and they can seek tax relief with the assistance of a certified, expert tax representative before simply cutting a check for more than one-third of their winnings.
Visit Michael Rozbruch’s Tax Resolution blog for more on this and other key tax issues facing the nation.
About Tax Resolution Services, Co. (TRS)
The tax attorneys, CPAs, EAs, and tax relief professionals at Tax Resolution Services, Co., pioneered the tax resolution industry. They have successfully settled thousands of cases over the past 14 years, and are committed to providing affordable, competitive solutions to businesses and individuals. Got IRS stress? Contact TRS. To find out how TRS can help, or to receive a free tax problem consultation, visit http://www.taxresolution.com or call (888) 851-5894.