Winning a medal at the Olympic Games comes with a number of benefits: the adulation of millions, appearances on late night talk shows and reality TV shows, lucrative endorsement contracts, and until recently, substantial federal and state tax bills. In addition to gold, silver, and bronze medals (which are worth up to approximately $600), Team USA athletes who are victorious at the Olympics receive monetary awards from the United Stated Olympic Committee (“USOC”). At the 2018 and 2020 Olympics, gold medalists will receive $37,500, silver medalists will receive $22,500, and bronze medalists will receive $15,000. Fortunately, for most athletes competing in the 2018 Winter Olympics and later games, recent legislation exempts these awards as well as the value of their medals from federal and Maryland income tax.
In 2016, President Obama signed the United States Appreciation for Olympians and Paralympians Act of 2016 into law. Under this law, Team USA athletes with incomes under $1 million do not have to pay federal income tax on the value of any Olympic medals they win and prize money they receive from the USOC because such amounts are specifically excluded from gross income. For most athletes earning less than $1 million, this exclusion has the effect of making such amounts tax-free for state income tax purposes as well. In 2017, the Maryland General Assembly went one step further, exempting the value of medals and prize money from Maryland income tax for winners at the Olympics, Paralympics, Special Olympics, and Deaflympics, regardless of income. It is important to note however that none of these provisions cover amounts earned through endorsements, which remains subject to tax as ordinary income.
These descriptions are intended for informational purposes only and should not be taken as legal advice on any particular set of facts or circumstances. Rosenberg Martin Greenberg, LLP is experienced in all aspects of federal and state tax laws, including tax planning, addressing prior compliance issues, tax audits and litigation, and more. Please contact Seth Groman at 410.649.1244 (firstname.lastname@example.org) or Brandon Mourges at 410.951.1149 (email@example.com) for a free consultation.