US Olympians receive tax breaks on medals and cash prizes

By Mark Luscombe, CPA, JD, LLM.

U.S. Olympians have won 40 gold medals, 44 silver medals and 42 bronze medals at the 2024 Paris Olympics, for a total of 126 medals. And that's only half. Because many competitions include team, relay and other multiple events, the number of medals awarded to U.S. athletes is more than double that: About 125 gold medals, 98 silver medals and 93 bronze medals went to individual victors.

Many U.S. athletes have received financial support from family, friends, sponsors, international or national sports organizations, their National Olympic Committee, or even through GoFundMe appeals to allow them to dedicate their time to training for the Games.

The value of these medals is estimated at about $950 for a gold medal (gilded silver; if the medal were pure gold, it would be worth over $40,000), $486 for a silver medal (solid silver), and $13 for a bronze medal (95% copper and 5% zinc). The Paris medals also contain a small piece of the Eiffel Tower. The U.S. Olympic and Paralympic Committee has recently paid out $37,500 for a gold medal, $22,500 for a silver medal, and $15,000 for a bronze medal. Some international federations for specific sports are also beginning to give financial awards to their Olympic medalists. Star Olympic athletes can often sign endorsement deals worth millions of dollars.

What taxes might these Olympians have to pay on the medals and funds they receive? Some of the potential issues these U.S. Olympians are likely to face include:

• Until 2016, the United States taxed Olympic medalists based on the value of the medals won. A law enacted in 2016 exempted the value of Olympic medals from tax starting in 2016 for individuals earning $1 million or less.
• The same law also exempted payments from the United States Olympic and Paralympic Committee (USOPC) from tax, again for individuals with incomes of $1 million or less.
• Thanks to endorsement deals with successful athletes and the participation of professional athletes, many medal winners have incomes of over a million dollars and still have to pay taxes on these medals and awards.
• Payments for medals from national or international sports federations are generally subject to US income tax
• Funds from family, friends, sponsors, GoFundMe appeals, etc. may be taxable unless the funds can be considered a gift, loan, or capital contribution for an interest in a business under the special circumstances.
• Payments for advertising and sponsorship contracts are generally subject to tax. It is difficult to consider funds received from a company as a gift.
• State taxes. Olympic athletes may be subject to state income taxes even if they are not subject to federal income taxes.
• It is unclear whether France wants to tax medal winners
• U.S. citizens competing for another country may be subject to U.S. tax on their Olympic medals and funds received

Mark Luscombe, CPA, JD, LLM is the senior federal tax analyst for Wolters Kluwer.